Is the Business Plan Dead?
Recently, we’ve experienced a wave of articles, blogs, news and comments, where a few entrepreneurs and theorists suggest that business plans are unnecessary, especially for small fast growing companies. In fact, some even go as far as saying that the business plan is dead, and a waste of time. They take too much time to elaborate; cost too much and have too small a payoff are the most common excuses for this mind set. But, does this really mean the business plan is dead?
No, this is still a needed and useful tool, but one that has evolved to meet the needs of the modern startup company. What has it become? Rather than emphasizing dreams and theories a good business plan has become a real tool; one that serves as a guide for strategy, product information, team information, one where investors can visualize the future of a startup company.
Most business plan templates are taken from textbook examples. And while learning these processes in business school can be effective, just because of the amount of data available for large businesses, there is an erroneous assumption that a small business should perform and a adapt to the practices of a large corporation. Best practices for a large corporation dictate careful planning, with annual planning rhythms, a comprehensive survey of the competitive environment, product build scenarios, set strategies, a monitoring of results and the list goes on. It is true that small businesses may not need as detailed a report, sometimes reaching as many as 50 pages, this doesn’t mean they need no guide at all.
The Key Lies in Defining the Words “Business Plan”
The English language can be somewhat confining, using one word to define so many things. Just as English only has one word to define the word “love” so there is only one word to define “Business Plan.” The consequences to this, is that we only have one perspective and one-size-fits all approach to the business plan, when there are actually many.
For instance, a small startup or early stage company could do well with an adaptive business plan and strategy. However, when seeking investors, a business may need to change their approach and adapt to the strict guideline presented by the investor in question.
The Need for Strategic Thinking
Whatever the size of the business, and despite the discussion of the relevance of a traditional business plan, every business needs some type of strategic thinking guide; one that offers clarity for the company. They need a plan that among other things details the specific areas of the business; these include customer approach, retention, profit model, and the path to success for the business.
That doesn’t necessitate a 50 page business plan based on theory and unfounded ideas, but instead, a guide for product, team and strategy information – one that investors might use to visualize the future success of a company. You can call this whatever you want – a business plan, blueprint, guide or whatever it is that outlines the future process and methods a business will conduct itself.