Business plans are unfashionable these days. Investors want to be sold on your company quickly and business plans lack the brevity and simplicity and, visual panache of a Pitch-Deck. They are hard to write, and time consuming to read.
None the less there is a case to be made for the business plan. Below are six reasons why you should consider writing one.
1. Clarifying your thinking
Good writing is good thinking. Ideas that seem brilliant and logical in your head can turn out to be prosaic and jumbled when laid out in black and white. Committing yourself to making your case in clear, simple prose is a way of forcing this revelation. If your idea is not so great then its better you know sooner rather than later; if it is jumbled, then writing is a great way of straightening it out and if it is, as you had hoped, brilliant, and logical, then it will do you good to have a version of it on paper.
2. Getting your team on the same page
Your big visionary idea is great for creating a sense of shared purpose, and you have managed to make it so that everybody in the founding team has that warm fuzzy, band of brothers feeling, but you may be surprised at how much you can disagree on when you get into the detail. Big ideas are great, but they can hide a multitude of views, some of which may not be compatible. A good way to air out these differences and make sure that you are on the same page is to write them up. A business plan is a clear and structured way of doing this.
3. Preparing your business case
Investors are going to ask you a tonne of questions. Writing a decent business plan will force you to answer them early.
Think of it as an up-front investment. These are questions you are going to have to answer anyway; doing so early and in prose is a great way to prepare.
4. Persuading investors
Although it is true that there are fewer of them these days, there are still investors who will want to see a business plan. Having one ready to go will help.
Whilst others will make do with your pitch deck, many will be comforted by the knowledge that a business plan exists. Even if they do not read it cover to cover they will likely flick through its pages to find areas of particular concern: your customer acquisition strategy, your revenue model or your competitive landscape….
In all instances a business plan communicates that you have done your homework, never a bad thing.
5. Increasing your confidence
Being prepared increases your confidence which, along with grit, luck and a reasonable degree of intelligence, is the one of the essential characteristics of a successful entrepreneur. Anything you can do to strengthen it is worth a try.
6. Turning your story into reality
Writing done well can play an important part in turning ideas into reality. In the early days of any venture you are telling a story of what could be. The task is to persuade potential investors, partners and customers that you have it in you to make that story come true.
Writing a business plan can be a powerful act of declaration, an exercise in accountability and an investment in prediction that will influence your intentions consciously and subconsciously, creating a sense of purpose and laying down a mental imprint, that will direct you when you are in the thick of action.
If you do decide to write a business plan, I would make four suggestions:
One, don’t write it too early. A business plan is a commitment that you don’t want to make until you are confident that your business idea will hold in its current form for at least a couple of years.
Two, don’t leave it too late. As your enterprise begins to pick up you will have less time and it will be harder to find the space to write one.
Three, do not confuse it with your pitch-deck, however good your business plan is, it will remain a second order document to most investors.
Four, pick a good guide and stick to it. I would recommend The FT Essential Guide to Writing a Business Plan.
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