I have been following an interesting discussion in one of my groups on LinkedIn, about whether or not a beginning business should have a Business Plan.
One lot says a Business Plan is essential—and another lot claims that planning is important, but a formal Business Plan is not always necessary.
Then, there is the third (and largest) lot of new entrepreneurs that think “planning” is a time suck and unnecessary … they just want to get their business started—they have all the details in their head.
Back in early 2009 I wrote a post about why new entrepreneurs should write down their plans instead of just keeping them in their head.
Here is a recap of that post, with a few additional comments thrown in:
- Some time ago, a study by Yale University found that years later 3% of their graduates had more wealth than the other 97% combined.
- A study by Harvard Business School 10 years after student’s graduation found that only 3% of them were financially independent.
- A study by the Ford Foundation discovered that only 3% of the population achieved their goals 89% of the time.
What was the significance of the 3% in each of these studies?
In every case, the 3% of successful people wrote down their goals and plans.
- The SBA has stated “Entrepreneurs who completed their planning were six times more likely to actually start a business [than those who did not have a written plan].”
- Then, of course, if you ever intend to seek investor money, you must have a written plan—or else.
So, here is my take on all of this:
You don’t need to write a formal Business Plan unless you are seeking investor money or a loan.
However, I also believe it is absolutely essential that you write down your “planning” somewhere—if you want to have any hope of success with your business.
People tell me that they get lost trying to write a Business Plan according to all the formal standards and advice that’s published regularly by the business gurus and experts, and so, they simply give up in frustration after awhile.
I agree completely and in upcoming posts I intend to discuss how to plan in a simple manner—and how best to write down those plans.
So, each week, watch for more articles about small business “planning” … there’s more to this topic than meets the eye.