A Business Plan is not Written in Stone
The almighty business plan is unquestionably considered the first step in building a new business. However, this article by Dileep Rao that we came across on Forbes.com asserts that having a plan may be overrated.
“Writing a business plan is not a passport to success. Not writing a plan is not automatic doom,” Rao says.
He continues by pointing out that over 50% of new businesses fail, even those with perfectly composed plans. On the other hand, he notes that some entrepreneurs who have a clear vision of what they want to do, yet skip the business plan, are able to create thriving businesses.
Although creating a business plan is not always necessary, Rao does explain it has value.
Create a business plan if you want to:
- Size up the marketplace
- Narrow down your strategy
- Estimate a budget
- Produce a document that gathers a team to rally around your vision
Write big ideas
For those who do choose to create one, he emphasizes that it’s not what’s on the paper that matters, but what you do with it. “It is not the beautiful prose that helps you to succeed. It is the brilliance of your opportunity and your execution.”
When you’re writing it, thing big. “We usually do not know what we can do until we try. But then, put in the effort to achieve it,” the author continues.
But keep expectations in check…
In terms of sharing it with venture capitalists, again it is useful, but your plan is not going to win you as many points as you think. Everyone in business knows things never unfold exactly as planned. Rao says that 98% of VCs wait to see some initial results, proving that the business is viable before getting on board.
The final verdict?
“Do the plan for the right reasons and for the right sources. Do it with reasonable assumptions, and with flexibility because you will be wrong in your assumptions. The business plan’s main role should be to help you analyze your opportunity before you have entered the swamp and when the alligators are not nipping,” Rao writes.
To read this article in its entirety, visit Forbes.com