Stop Writing That Business Plan

You. Yes, you. Stop it.

Every startup founder has heard it:

“Write your business plan! You can’t get funding without a business plan!”

But if the first business plan you write is the one you write in search of funding, you’re probably not going to get it. And you’re probably not ready for it anyway.

So stop.

Before you set out to raise or borrow funds to start your business, you’ve got some critical issues to iron out. That’s why the first business plan you write shouldn’t be written for potential investors, it should be written for you and you alone.

This is the no-frills, written-in-pencil plan that lays out why and how your company will be successful. You aren’t trying to please anyone. You aren’t trying to impress anyone. You are simply seeking answers to the questions that will show you (and potential investors or lenders) whether your idea is viable and, if it is, exactly how you’ll go about making sure your business is profitable.

Questions to ask yourself include:

• What is the real market for this product/service?
• How likely is it that customers will buy my product/service?
• What is the most cost-effective means of promoting this business?
• Who is my real competition? How will I differentiate myself?
• What do I know about running a business, and what do I need to learn?
• Who is most likely to fund a project like this?
• What are my biggest risks, and what can I do about them?
• What are my past successes … and failures? And what have I learned from them?

If you fully understand your strengths and weaknesses, you’ve taken the time to work through various risk scenarios, and you have solid plans for avoiding potential pitfalls, you’ll be able to present your business confidently, without worrying that a potential investor or lender will uncover vulnerabilities you aren’t prepared to address.

Imagine getting this question after your pitch:

“Since you have never marketed a product yourself, how do you expect to be able to market this one?”

Ouch.

Without knowing ahead of time that this is a real weakness, and without making accommodations for it, there is little you can do but mumble. Instead, imagine being able to say, for instance:

“I have established a strong website and I have connected with a marketing pro who has successfully worked with dozens of companies just like mine.”

Better? Absolutely.

The research and thought you put into your personal business plan will prepare you to write a more formal one, especially with regard to financials. Most new business owners pull numbers out of a hat, using them to show an impressive upward growth trajectory. But most lenders and investors know better than to take these kinds of projections at face value.

If you’ve done your homework prior to starting your formal business plan, you’ll be able to present a far more realistic forecast. You’ll understand which events will affect your revenue, and you’ll know how you will react to early signs of trouble. And when you do launch your business, you’ll find that you’re far better prepared to deal with changes in those factors that are beyond your control.

How long will it take to create your personal business plan? That will depend on how familiar you are with your industry and whether you’ve launched a business before. But you shouldn’t rush it. The time you spend on this initial planning and forethought will be rewarded over and over again as you build your business.

This article was originally published at dolphinmicro.com