At some point in your career as an entrepreneur, you’ve probably asked yourself, “Do I need a business plan?
or
Are business plans necessary for entrepreneurs?
Be honest. Writing a business plan is like listening to less favorite music for long hours.
When it comes to business plans, Most people imagine a 20-page business plan with bar graphs, charts, and complicated cash flow estimates. This is a traditional business plan. This image of a business plan discourages entrepreneurs from writing one.
Business plans are more than graphs, charts, and cash flow estimates. It’s about drafting a strategy for running your business. a 20 flow charts pile is not necessary for your business; instead, you just need to know deeply about company money making. That may work.
Not everyone needs a typical business plan, but not everyone can go without one. How can you determine if a traditional business plan is necessary for your business?
Evaluating the broad vision of your business is the key. When you know your vision, you can decide if you need a full-fledged business plan or if you can put your energy into something simpler.
Here’s a quick look at when you might need a business plan and why:
when you need a traditional business plan
There are a few times when a traditional business plan is needed. Here are some of them:
- Executive summary
- Overview of the business and industry
- Analysis of the market
- Analysis of the competition
- Sales and marketing plan
- Ownership and management plan
- Operating plan
- Financial plan
Evaluate your business vision to see if any of these situations apply to you. If so, then congrats! You’re going to need flow charts in the future.
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1. when you ask a bank for a loan
When you take money from a bank, they want to know a few things before they give you the money:
- Will you be around to pay them back?
(How good is your business’s operation?)
- How will you make money to pay them back?
(Are your business’s sales and marketing strong?)
- Do you have enough money to pay them back?
(How is your business doing financially and in terms of cash flow?)
Since most business loans are for a considerable amount, the bank will want to see proof that your business is trustworthy and financially stable. Traditional business plans are detailed (that’s why they’re so daunting! ), and if you have one ready when you ask for a loan, your chances of being approved will be higher.
2. when presenting your company to investors
Investors want to know that they’ll get their money back, and then some, just like banks, want to know that you’ll pay them back. This means you have to show them that:
- You’ve thoroughly considered and validated your business idea.
- You are able to make your business idea work.
- You know precisely what you’re going to do with their investment.
Again, a traditional business plan will go into a hit about all these things.
A traditional business plan shows investors that you’re serious about your business and that you’ve already put time and effort into ensuring your business idea is good.
3. when you hire partners or other people with a lot of skills
In the early stages of your business, if you want to bring on a partner or other skilled professionals, you’ll need a business plan.
Asking someone to join your business before they know the business strategy and how it works is like marrying a stranger. Everything is good initially, but things can quickly get messed up after some time.
Starting a business with someone is a big commitment. You and your partner should be 100% on board, which can only happen if your potential partner knows about the goal, strategy, and money status.
Your business plan also protects you from working with people who aren’t a good fit, in addition to helping possible partners decide if they want to join your business. After they’ve read your plan, you can talk about the details and see if they match your goals and visions.
when you need a business plan that isn’t the norm
An untraditional business plan is a version of a traditional business plan that is shorter and easier to understand. These can be anything from a one-page mini-plan to several pages focusing on just one part of a traditional business plan.
Here are some times when an untraditional business plan can be helpful:
1. when you’re still trying out an idea for a business
If you have an enormous idea but still need to work out the details, an untraditional business plan can help you organize your goals while giving you room to work on the details.
Make sure your business can work, and that there is a market for it BEFORE you start a traditional business, you can save time and money by making a plan. Also, you’ll find writing a traditional business plan easier because you’ll have real-life examples to use.
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2. if you’re having trouble with one part of your business
If you’re unsure what’s working or what’s not in your business, try a non-traditional business plan. You don’t have to write a complete business plan. Instead, you can focus on one part that solves your problem.
You have a great product, but you need help getting the word out. Focus on writing a marketing plan. Meeting your sales goals but needing help keeping track of your money? Try creating a financial analysis.
Focusing on one part of your business helps you deal with your challenges and gives you a head start if you ever decide to write a traditional business plan.
You can also use this strategy when an area of your business requires minor improvement or additional attention. You may not be in dire straits, but there are always a few areas of our business that might benefit from more attention.
3. if you want the room to try new things
Some people think that the problem with a business plan is that you have to follow it flawlessly. If you like to try new things and let things grow on their own, a traditional business plan can feel like it’s suffocating your creativity.
Instead of thinking of a business plan as a plan, you can use an untraditional business plan as a place to write down what you try.
Before trying something new in your business, make a mini-plan and track how it goes. You’ll still learn valuable things about your business and have a lot of room for error and play.
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final thoughts
Even though business plans can be intimidating for new business owners, remember that there is no right way to run a business. It doesn’t matter if you go all in with a traditional plan or keep things chill with something non-traditional. How you run your valuable business is solely up to YOU.
