The raison d’être of a Business Plan

Are business plans really important? For others, no! For yourself and your business, heck yeah!


Before we move on, a note: A business plan does not have to be 20, 30 or even 50 pages long. There is no defined length of the document, or format, as long as it covers all the aspects of your business and ideas. Now, that’s clear, let’s move on.

Here are some reasons why I ask entrepreneurs to write a business plan:

Rainbows in your head

source: shutterstock (buy an HD video version here)

Are your dreams and thoughts more colorful than your life? If you are like Walter Mitty, before his epiphany, then most likely your answer is a ‘YES!’

When we drum up a business idea, the same principles apply — the idea is more vivid, colorful, adventurous and optimistic than what it might spew out in real life. Now, this may be because your ideas are fantastical in the first place, but it also is usually because of mis-connected dots.

In your head, all the dots (elements of your idea and plan) connect perfectly as they are needed. The vendors exist and have a great track record of supplying things just when you need them, the customers are just waiting with their wallets to buy your thingamajig, your employees are brilliant and can work like Hercules and think like Bruce Wayne (or Tony Stark, if you are not a DC fan), your costs are low, your revenues are optimistic, your marketing plan is flawless… you get the point!

But the thing to remember is that it is still a castle in the sky (do they still use that phrase?). When you start jotting things down and actually start connecting the dots in 2D or 3D space, you realize one of the following:

  • Some dots are missing (you did not think of some elements)
  • Some dots block other lines (there are hindrances that you did not anticipate)
  • Some dots just can’t be connected using a straight line (things aren’t as simple as you thought)
  • Some dots shouldn’t or needn’t be there (you over planned things)
  • Some dots are orphaned, while others are over-connected (you did not map out dependencies efficiently)

Repetition leads to (near) perfection

This is why people rehearse and repeat and practice — to make their efforts result in something really good. Remember the last time you just winged a speech versus the time you read through it a few times versus when you actually practiced it over and over again? Well, it’s the same thing!

When I wrote letters to my girlfriends as a young teenager (yes, back then we did not have email or IMs or snapchats), I realized that my 2nd draft was better than my first (and 3rd was better than 2nd and so on). There were things I wanted to say, but forgot to add; there were things I said, but could say it better (like instead of saying, “your eyes are like that of a cow’s”, saying, “your eyes are like that of a deer’s” | yes! I mentioned ‘cow’ once) and the whole letter was just more emotional.

This lesson, I carried with me since then and make sure that every time I create something, I iterate it through versions. Generally, by the third time, it’s good to go.

Writing your idea and plan down in a document, allows you to take it through versions. Go ahead and try this out: if you have written a business plan, take it out / open it up and read through it. As you read, you are most likely mentally or physically smacking your forehead on sections that you now realize could have been much better — more detailed, explained succinctly, redone, etc.

You can’t do that with ideas and thoughts that easily, because you can play around with it.

Tony Stark disassembling Mach 1 to build Mach 2 (Ironman 1 2008). copyright: Marvel Studio

To be true to yourself

Gandhi said (at least he’s attributed to say this), “If you lie in your diary, you are lying to no one but yourself” (paraphrased).

Version 1 of your business plan is your personal version of the document (God help you if this is the version you want to circulate. Go read point 2 again!). In it, you pour your heart and mind out. Just write the way you see things and not the way you want others to see it.

This allows you to be honest and objective about your idea or plan without worrying about what others might think of it.

The spin and the bullshit comes in the second draft version!

It requires serious effort

Well, not the writing or typing part, but to plug all the holes and connect all the dots. You have to do some serious research to make sure your claims can hold water. This means, you can no longer just make a table with made up numbers, and have to substantiate it with actual proof that the numbers are valid.

Connecting financial dots is another positive result of business plan documenting. I have seen my fair share of business plans (I am guessing they were draft version 1) that had contradictory figures in tables that sat next to each other. For example, Sales/Revenue Forecast tables would show X, while the P&L (Income) statement would show Y.

Such things get ironed out when you re-version your document.


Don’t write a business plan for others, that’s akin to wearing a helmet to please the cops on the road. Write a business plan because that’s what is good for you. Take it through different versions (don’t forget to consult your pillow between versions). Put in some serious work, because, this is a resume of your business and if you do get someone to look at it, you want them to read through it (enjoy it and also go ‘aaah!’) and not throw it in the trash!

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