Do startup's really need a business plan?

[duncan drennan]

Guy Kawasaki is reporting on an article in the Wall Street Journal, "Enterprise: Do Start-ups Really Need Formal Business Plans"

A study recently released by Babson College analyzed 116 businesses started by alumni who graduated between 1985 and 2003. Comparing success measures such as annual revenue, employee numbers and net income, the study found no statistical difference in success between those businesses started with formal written plans and those without them...

"What we really don't want to do is literally spend a year or more essentially writing a business plan without knowing we have actual customers," says William Bygrave, an entrepreneurship professor at Babson College in Wellesley, Mass., who says he generally advocates "just do it." Entrepreneurs must be nimble, and will be more apt to stick with a flawed concept they spent months drafting, he adds.

Read the full blog post, "Is a Business Plan Necessary?" by Guy Kawasaki

I think there are a couple of important points Guy raises, here is one I like,

A great plan won't make a lousy idea successful, and a lousy plan won't necessarily stop a great idea.

I think that sometimes the process of going through a business plan (formal or not) is important as it helps you to work through the issues in your mind (I'm not one to speak, I don't have a formal business plan )

What do you guys think? To business plan, or not to business plan?

(just a note, they are referring particularly to a formal business plan)

[Dave A]

It probably depends how you view start-ups. If you see it as a pilot, the main purpose is to test the waters and collect information. This recognises that the understanding of the operation is still incomplete at this point.

If a start-up is supposed to be the first step towards a full blown production every time and not a trial, the demand for a more precise analysis of the prospects for success are much higher.

[Karenwhe]

It depends on the stat up also. If the start up is looking for venture capital (in the millions), they can't do without a business plan - and must be a very good one with great market research foundations, key persons, sales and marketing strategy, competitive analysis and much more.

But for he regular person that is starting a business from their own money .....(in my opinion) they should at least have a guideline plan. It helps writing stuff like that to clear the mind, find direction, research market, customers, competition.... but it probably won't be something one would send to the bank, but something one can look back on and change as needed to progress in the right direction and learn from what is or has been achieved. In that sense I believe it is helpful.

[Marq]

I think one needs a plan at all stages. Definitely a high end plan as per Karens post - no matter the stage or size. I also believe that if you have two or partners or associates then one definitely needs a written plan of sorts. It probably will get more formal as the business grows or the needs to finance it become necessary.

I think though that the plan should not take up a lot of time and energy, should be easy to read and understand and it should be hauled out every 6 months or so and reviewed audited with current results and adjusted according to the direction the business is taking.

Oh and a plan to make a plan next week, is a sure fire recipe for a disaster - ask any politician.

[garthu]

All for a good well thought out business plan. Whilst i agree it shouldn't take up your time, i dont think it should be finished same day... what real throught could have gone in. Crazy but often i get a really good idea a week later (after 1st thought) just after jumping into bed For me the real process would be to create great ideas that you may not have thought of, more importantly to get back on track when times are tough/hectic etc and that happens easily, especially a start up... Dont know the exact stats but something like 9 out of 10 business fail, 99% of them dont have a plan, of the ones succeeded 70% had business plans - something like that

[solweb]

A business plan cannot be set in stone

A Business has a life of its own and therefore your business plan must be flexible. You use it as a guide and update or revise as necessary.

Michael Vella

[eitai2001]

Guy Kawasaki is reporting on an article in the Wall Street Journal, "Enterprise: Do Start-ups Really Need Formal Business Plans"



I think there are a couple of important points Guy raises, here is one I like,



I think that sometimes the process of going through a business plan (formal or not) is important as it helps you to work through the issues in your mind (I'm not one to speak, I don't have a formal business plan )

What do you guys think? To business plan, or not to business plan?

(just a note, they are referring particularly to a formal business plan)

I have been running my company for 2 years with no business plan ... just the ideas in my head

[garthu]

Ah! Agreed, but could you take your business to different level with a plan?? Franchised or multy office etc. The power of a plan could take you there?

[Marq]

could you take your business to different level with a plan?

Right on the button.

I also think that with a defined plan one can visualise the end result better. Bringing the mental picture through the emotional levels makes it happen in the physical.

[3x-a-d3-u5]

I feel any sort of business plan is a must. Whether its in your head or written down or a 20 page description of hte market and setup, it all helps to organise ideas. However as the point already came out, the business plan takes you to the next level. Constantly following the 7 step process of swot'ing' and analysing competition will only lead to you getting ahead quicker. The lazy (me) will agree with me on this one, its so much easier to think it all up than to really Think it out and write it down.

Initially my business had no plan. But i was surviving and loving it. However after a seminar it become clearer that a more structured plan for success (including direction to success) is a much safer route.

If you have a good/decent service/product people will buy (eventually). But did your business plan tell you that the folks over the hill would like your product even more!