Business plans are a complicated thing. On the one hand, it is commonly said that if you fail to plan, you are merely planning to fail. And, on the other, when you think of many exceptional entrepreneurs out there, in fact, many of them started with just a great idea and a whole lot of enthusiasm.
If you’re just getting started in the business world, the conventional wisdom is that you need a business plan. Hence, you should either write one yourself or get a professional to do it for you. But is a business plan really a guaranteed recipe for success? Or are you wasting your time writing one? In this post, I’ll explore both sides of the argument.
How a business plan can be useless
Analysis paralysis
However, friendly advice. Don’t dwell forever on analysis, that you end up not actually taking any actual steps towards implementation to reach your goals. As it is, actually a very common phenomenon called analysis paralysis. Business plans help you see both sides of your business case. You can see the positive arguments but also the negatives become somewhat amplified, and leading to a loss of confidence.
There are actually various ways to do your business analysis.
Heck! The real business world is too dynamic, business plans cannot predict accurately
Here is the other truth about business plans. Despite all the cover of financial statements and jargon that may be employed, they remain inherently speculative. No one can really predict what future business conditions may be, particularly for new businesses. So you can’t expect to start a new business and abide step by step, by your business plan.
You don’t use it appropriately
Besides the obvious limitations discussed above, the reasons why business plans do not work for a lot of people, are sometimes due to the fact that people do not accurately measure their results by their projections.
However, business plans do have their uses and are useful in some ways. And they can help first-time entrepreneurs and small business owners deal with the challenges of running a business in the following ways:
Anticipate the challenges
While spontaneity can be the deciding factor for the success of your business, you should endeavor to make haste slowly. To put this differently, a business plan helps you take on the inevitable challenges of doing business from a position of strength.
Good anticipation will also enable to you develop an accurate scale of preference in terms of your many business needs, and thus, to devote your energy in the right direction.
Get funding
A well-written business plan is useful first for providing a sense of direction to you, but also for helping you to attract funding. While you may be able to see the big picture of how your business should work all in your head, prospective investors may not be able to visualize things quite as clearly as you do. This is where your business plan comes in handy and does all the talking for you.
Very few serious investors will hand over any significant amount of cash to you without having satisfied themselves that they will earn a decent return from it. Likewise, the banks would also want your business to be able to repay any loans and make profits.
Having considered the broad ways a business plan may or may not be useful? We will now should you how to maximize the utility of a business plan:
Keep your estimates realistic
Unrealistic and overly optimistic business plans will be easy to see through for experienced investors and business people, so you will likely not get the funding you are looking for if you inflate your figures. Another big nono is inflating figures. Investors, of course, want to make big bucks, but they have been in the business world for so long, a realistic approach would be more appealing.
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Keep your business plans updated
The world of business is extremely dynamic and your business plans will have to be as well. The best proof of how a business works lie in actual experimentation, so as you figure out what works and what doesn’t, you have to make sure to adjust it to reflect this reality.
In conclusion, the truth is that a business plan is actually going to be whatever you make of it. Do the right research, stay flexible, and keep your numbers realistic. Understand that your business plan may be the key to attracting the funding you need to keep your business on track through difficult moments.
