Do Business Plans have an important role in the entrepreneurial process (Burns, 2007) or are they a waste of time because dreams and goals can change?

Are Business Plans an essential strategic management tool, or … a creativity sponge!

Over the last 11 years I have written, or supported the writing of (mainly during my Business Start-up courses) over 100 Business Plans. Each one different and each with its own idiosyncrasies and ‘grey areas’. Some that have been purely for the business owners reference, and some which have been presented to banks in the hope of securing £100,000’s of finance.I’ve written extremely detailed business plans for my own businesses, reminding me of values, vision and mission, the reasons I started in the first place, which have even bought up a few surprises in the way I thought the business might go. Despite the fact that I’m not really a ‘planner’, I do have two business degrees and considered that the least I could do was write a decent business plan for my own business! It was also ‘thinking time’ to make sure I had considered all areas of the business properly. However, the battle with my entrepreneurial brain was real. Trying to get all of those creative thoughts out of my head, do justice to the potential of my business idea on paper, was hard. When I was studying for my MBA during 2020/21 and researching into business planning whilst also enjoying some lovely ‘lockdown’ networking coffee mornings with my regular group, planning and the value of it for small businesses came up a lot… What’s the point of planning if you don’t plan for a pandemic??!

So, I thought I’d share some contrasting thoughts with you so you can make up your own mind whether, and what type of planning is best for your business.

Why you need a Business Plan?

Provides structure and definition to your businessHelps you think about your business critically and identify missing informationIdentifies goals, vision and (short and long-term) objectivesTests validity and viability of ideasAids the entrepreneurial processBrings stakeholders on boardLays out the implementation processGives clarity on decision makingIdentifies market: customers, competitors, supply and demandActs as a communication toolHelps identify funding needs and generate financeProvides timeline, milestonesIdentifies available resources and resource gapsIdentify strengths and weaknessesIdentify risks

Why you don’t need a Business Plan

It takes time to write when you could be just getting startedWe can’t predict what’s going to happen next month/yearAll that work and it will just become outdatedIt can impede creativity and intuitionI need to try out my product first to understand supply and demandIt might not be flexible enough to allow for new opportunities, changing environments and marketsI need a lot of information about my business I don’t know have yetI need to know who my stakeholders are and what is relevant to them

YOUR Plan

If you are formulating a plan just for you (i.e. not applying to a bank for funding*) then as Paul Burn’s says there are ‘no set rules’ in what your Business Plan should look like or include. Whether you are a planner who likes structure or a creative person who prefers to be guided by intuition, or somewhere in between’ there’s a ‘plan’ that will suit you and your business.

It could be:

Full Business Plan

Presentation

Vision board

Spider diagram

Journal

Concept statement

‘Elevator’ pitch

Sketch

Project plan

Checklist

There is even argument that for some of us a mental plan will do, no need to write it down at all. (No good for me as my head is always exploding with information and I need to get some of it out onto paper!). Also, I think that you need to work through each section to make sure you’ve considered everything.There are other options to a full on business plan which guide your process and make sure you’ve considered all parts of your business.

The first is the Business Model Canvas
which consideres your business from both yours and the customers point of view.

The second process I came across while completing my masters is
Paul Burns New Venture Creation.

Burn’s explains that this is designed to make you think about each part of your business is detail, which can then be transferred over to your business plan.

Forming some sort of plan will help you to learn about your business, your product, your market and your stakeholders right from the start. However, it should consider the context, for example your industry, the certainty of your idea and the level of capital you have access to/need. It should also be a working document which can be refined to meet changing environments and opportunities. It doesn’t need to include everything, perhaps you can split your business idea into ‘projects’ and do a ‘plan’ (in my case a spider diagram) for each.

A Business Plan could help you consider areas you might not think about without a ‘heading’ to guide you. But allow for changing dreams, goals and opportunities and if anything, adapt the plan to fit them, rather than the other way round.

When I am ‘planning’ each new event/project now, this takes a much more flexible form with individual aims and objectives and financial forecasts.

So, my advice would be:

Have a plan, but do it in whatever way works best for you.Be realistic but positive! Don’t let it impede your ‘entrepreneurial mindset’ or delay you getting started.If things don’t go‘to plan’ then learn from it, adapt and try again 🙂

I debated including here a few priority areas that you should consider in your ‘plan’ but I’m not going to, because each one will be different and you need to make it ‘yours’. Also, there are literally MILLIONS of resources online you can use.

Feel free to contact me if you’d like some help with your business idea, or creating a business plan.

Good Luck!

*If you are applying for finance then your potential funders may have their own draft plan they will expect you to complete.

References:

Burns, P. (2007)Entrepreneurship and Small Business. Basingstoke. Palgrave.

Burns, P. (2014) New Venture Creation. Basingstoke. Palgrave.

Nielsen, S.L., Klyver, K., Rostgaard, E. and Bager, T. (2021) Entrepreneurship in Theory and Practice: Paradoxes in Play. Cheltenham. Elgar.