If you are an entrepreneur or striving to become one, one of the first things you will come in touch with is writing a business plan. Do you need a business plan and if yes, how should you write it? Is a good business plan a sign of a future successful business or is there something else that makes a difference?
While many experts claim that you need a business plan, in this article I will explain why business plans, even those from Ivy League Universities and prestigious MBAs don’t work for the majority of start-ups and entrepreneurs.
Some of the most successful entrepreneurs in the world never had a business plan, while many entrepreneurs have a perfectly written business plan but never achieve the success they strive for. So, this leaves us with the question “Why Business Plans Don’t Work?”.
A business plan can definitely help your business and it is a must, once you want to raise capital and pitch your business idea to investors.
To understand business plans better, and how to actually use them to grow your business, let’s look at a few reasons why business plans don’t work:
1. They are written by academic experts, not actual entrepreneurs
Most templates you can find on the internet are very similar and cover some general areas like market research, the mission, and vision of your company, financial predictions, etc. While answering these questions is useful, business plan templates obviously miss the more practical side of building a business. This makes us wonder: Who wrote these business plan templates? Are they written by professors at reputable universities who have years of theoretical research but never built a business?
2. They are theoretical and not action-oriented
Once you use these general templates and fill them in, those answers will not actually help you grow your business. Why? Because the theory doesn’t equal practice. Entrepreneurs spend days writing their plans and afterward still wonder: “But how do I find my customers and build this business idea into a real business?”
3. They show the goal, but not the path
While having a clear vision of where you want your business to be, and what bigger mission you want it to fulfill, you should also have an action plan to show how the business will actually develop. The problem with most templates is that they ask you what strategies will you use, and how will you create a unique selling proposition or fill the market gap, but most entrepreneurs don’t even know what different business and marketing strategies there are. So how will you then answer these questions if you don’t understand how to build systems and processes in your business?
4. Market changes faster than predicted on the plan
Doing market research is absolutely necessary before you start your business. However, once you step into building it, you will discover many gaps, false information, customer feedback, and competitors that you have never come across before. Also, the market nowadays, changes so quickly, that your plan can be obsolete within weeks or months of writing it. So you need to stay up to date with the changes and market directions and ideally go ahead of the market.
5. Plan is not followed by the right action
Most entrepreneurs fail, not because of their business plan, but because they don’t take action. Ideas are just ideas until you realize them. So instead of overthinking and spending days or weeks on your business plan, hoping to write a “perfect” one, focus your time on income-producing activities and developing the skills that are necessary for your success.
So, should you or, should you not be writing a business plan? Yes, absolutely, but make sure that the plan has clear action steps on how your targets and vision will be achieved. Also, invest in developing your sales, prospecting, and communication skills, because these are crucial for every business. Hire a business coach that will teach you about different strategies and how to create systems and processes in your business. And lastly, surround yourself with business owners and entrepreneurs who have been on the same journey and achieved things you want to achieve.
A few minutes spent with a successful business owner will teach you more than any MBA available in the market!