I’ve been having this discussion on Linked In about whether a start up company needs a business plan or not. If you ask any Ivy League MBA you will probably hear that you absolutely do need one. And you need to spend thousands of dollars to have someone smarter than you put one together.
But if you ask my friend Oliver who owns a print shop or the dog groomers around the corner or my acupuncturist, they would tell you they never had one. I’ve run 3 businesses and have never written a formal business plan. One of them is an international manufacturing company and I’ve never had a business plan for it. Once I had already been in business for years I was planning to expand and needed to raise money. That’s the only time I have put anything down on paper, but it still wasn’t a business plan, more like a presentation with corporate bios and projections of how many would be sold, etc.
I took that presentation out of the closet and read through it. 90% of what was in it wasn’t even true anymore. None of my employees are with me anymore because of the downturn in the economy. So, what I thought my business was going to be, which was sales reps and full time employees, wasn’t even close to what I ended up with. Now I have distributors who are independent and simply buy the product from me and get marketing and PR support.
This is something I couldn’t have “projected” in a formal business plan. I originally thought I would be getting into retail stores. And I did. But it was an uphill battle for one person. So I hired employees. And they were the best employees you could ever ask for. They did get the product into stores. But what I couldn’t have predicted is that it was a brand new product that no one had ever heard of. No one was going to go into a store and ask for a wrist water bottle. I hadn’t built up a demand for the product yet. Again, not something I would have known about by doing a business plan. Everything I have learned about running a business has all been from trial and error.
I think the answer about whether you need a business plan or not is in the gray area. I’m not saying that no business should have a business plan. But I’m also not saying that all businesses have to have one. That doesn’t mean not having a plan. When you decide to take a vacation you usually know where you want to go, when you want to go, and how you will get there. But micro-managing the whole trip kind of takes the fun out of it. Part of the fun of a vacation is the adventure. Trying new things. Serendipity. And besides, you can’t plan for everything anyway. What if it rains? What if the tropical storm turns into a hurricane? What if your car breaks down and you get stranded in the middle of nowhere?
I’m sure there will be plenty of people who will disagree with me, especially anyone that sells consulting services or has never actually run a business of their own. But there are no rules in life and there aren’t any in business either. Business plan or no business plan, at the end of the day you have to have customers and make money. Period.