Lately, it seems that nearly every entrepreneurship blog that I read has taken a strong opinion about the value of a business plan. The majority opinion seems to be, “No way – business plans are so 1990′s! We’ve grown up, and we see how silly it was to create big honking business plans.”
I read comments like …
“Why create some static document that will probably be out of date within hours to days after it has been written?”
And, “Why spend time worrying about getting some plan perfect when you should be working on your product?”
And, “Just launch something and then change it if it isn’t right.”
The enlightened entrepreneurs don’t just say “no business plans” – they offer an alternative. My personal favorite new advice comes from Steve Blank who advocates building out a business model.
For me, business plans have always served two purposes.
First, like building out your business model, building a proper business plan causes you to think through your venture – and what will make it tick. How will it make money? How much? From whom? And, most importantly, how do you know? Yeah, I know it will change tomorrow, and you have a better chance of being hit by lightning three times in one day than of hitting your revenue projections right on – but at least you thought it through.
Second, for those who care (investors, maybe?), it is a signal that you care enough about your venture to explore and test options, assumptions, and seeming opportunities – rather than fly off down some blind alley. A thoughtful plan signals a thoughtful team, because a superficial team cannot create a thoughtful plan.
I see this issue very strongly related to the issue of whether or not to front load innovation or product development research – or just pick some concept, any concept, and launch it. As I said in a couple of recent posts, if you take the time to do the front end work, you reap the benefit of deep knowledge about what drives value for the stakeholders. I think the same is true of spending time on a “business plan”, another up front learning and exploration exercise. You learn what will drive value for your venture.
That being said, I put business plan in quotes above because I don’t believe you need to write a 75 page tome. The need for a business plan has not changed, but the definition of how to package a “business plan” has.
And that will be the subject of a coming post.