What are the pros and cons of a business plan? I asked a group of business owners and here are their answers:
I am a serial entrepreneur with both successes and failures under my belt. I have even lost 2 x million dollar companies, the last one due to Covid (travel industry). Entrepreneurship surely is a rollercoaster…
Here is my view on the pros and cons of a business plan:
As a serial entrepreneur, I can say that except for my first business, I have never done business plans. Despite the first and only business plan being both lacking and incomplete, I built the business from an investment of $3000 to almost $2 million over 6 years.
I identify with Mark Zuckerberg’s “Move fast and break things”. I believe that business plans are for the most part, a waste of time. Get going and take action, then course-correct. Having said that, I do believe that business plans have their place, especially in larger ventures. However, just because I don’t believe in business plans, does not mean that I am not analyzing before I start a new venture. Far from it. I research heavily! I simply do not spend time making elaborate business plans and use them as guiding documents for running my business.
Marketing plans, however, are a totally different story! I use Allen Dib’s 1-page marketing plan framework in my businesses.
Founder of Leisurehiking.com
I’m John Linden and I am an interior designer from Los Angeles(www.mirrorcoop.com). When I started my business 7 years ago, my partners and I developed a very detailed business plan. We projected revenue, expenses, cashflow. We looked at where we wanted to be in 3-5 years.
And we did it all on paper and used it as a road map for our progress.We hired an accountant to do projections and answer questions throughout the year. He was vital in making sure our projections were accurate – which helped us reach our goals or course-correct when we were off track.In the end, I’m glad I had a business plan!
It helped me make decisions and set goals all along the way – from finding investors to deciding whether each opportunity was worth pursuing or not. Today, I still refer back to it (even though things have changed so much since then). Now, I don’t know if a business plan is essential for every startup.
If you’re in the early stages of brainstorming an idea with a couple of friends/co-founders, maybe it’s not worth writing one up. But for those who are serious about getting your idea off the ground as a legitimate business – it might be worth giving it a shot.
Also, there are plenty of free templates online to help you get started. Don’t pay someone to write one for you – many times these plans will turn out very generic and non-specific! Write your own or ask people you know for feedback. You can also find templates at your local library.
I do remember one thing that helped me when writing my business plan: I wrote it from a customer’s perspective. Where do you see yourself in 3-5 years? What problem are you solving? How does your product/service make someone else’s life easier or better? If you can answer those questions, then the details about prices, revenue projections, etc.will fall into place.
John Linden – Designer
“When I first started my company, one of the first things I did was create a business plan. Looking back, although making the business plan was time consuming and not always accurate, I believe the positive impact of the plan helped my business to become more successful. The business plan helped me to understand where to allocate my finances and which parts of the business would need more investment.
By knowing what I needed to achieve before I could begin making a profit, this made the high initial financial investment seem less painful, because I had a goal I was aiming for and a clear way to achieve this goal. The business plan also helped me to focus on my target audience more efficiently. I was able to shape the business and advertising in a way that made it more appealing to my core demographic. If I could go back in time, I would definitely still create a business plan. I believe it has played an integral role in the success of my company.”
GreenPal – Uber for Lawn Care
I bootstrapped my e-commerce business in early 2019 without a business plan growing 100% year over year to $1 million in revenue. Not having a business plan or investors allowed us to adapt and bring products to market faster than our competitors. WhileI don’t think a formal business plan is necessary when capital isn’t being raised it is still vital for entrepreneurs to understand their value proposition, potential market share, and margins to ensure there are sufficient demand and profit for their product or service.
Amazon listing: https://www.amazon.com/dp/B0826KNT8W
I run an online food and drink business that I launched in 2019. I’m very much in favor of producing a business plan, even if you’re bootstrapping the entire operation and aren’t seeking outside funding.
Having this sort of “emotionally neutral” reference point is a powerful tool when the early days enthusiasm runs out. If you haven’t met those targets, you haven’t earned the justification to doubt the viability of the business.
Bio: John Bedford is the founder of Viva Flavor, a site dedicated to helping amateur cooks explore the world of food and drink.
Name: John Bedford
Company: Viva Flavor
- It provides us with a overview of what my business should or might look like in near future.
- Business plans outlines the work we need to do make something happen.
- It also provides us with a list of things that we should cut out from our business.
- A long term business plan also gives us a roadmap to future of our business plans.
- Time consuming. Sometime while planning for the future we tend to lose our focus on the present.
- Having static business plans gives us no options to overcome they failure, if there is any.
- Sometimes, business plans makes us stay within a roadmap, which hinders our will to think out of the box.
- Allows you to think creatively
- Allows you to create a plan
- Forces you to map out your attack
- Gives validity to your cause
- Helps you and investors see the big picture
- No one will read it
When it comes to the pros and cons of a business plan, entrepreneurs have different ideas about whether they work or not. What do you think?