Sunday, May 21, 2006

Writing a business plan, needed or not?

There are literally hundreds of business websites out there with advice, tips and methods to setting up your business and there is one thing you can guarantee each one of them has on. Writing a Business plan, they will all recommend you make a detailed business plan before you even begin doing anything (well, after doing the market research). They will give you tips, advice and examples of business plans and explain that without a business plan you will find it hard to succeed.

Now if you need to borrow money from the bank to set up your business then there is no doubting that you need a very thorough business plan set out in such a way that anyone can understand it. However, what if you don't need to borrow money, what if you have a clear idea in your head about what you are going to do, have other businesses made a success despite not having a business plan together.

Let me just set the record straight, I think it is key to have a business plan and a strong idea about where you will be going short, medium and long term, however, I do not feel it necessary if you are not borrowing from the bank to have a detailed written plan.

If you have a strong entrepreneurial or business mind then I think that you can make a success of a business without it all being written down in a folder which you will pick up 3 times in 5 years. I want to give you a short case study of two unnamed businesses, neither wrote a business plan, both are at different stages of their business life but they are good to look at.

Business One: This business has been established for about 6 years and is a multi million pound company with about 15 staff members. This business had no business plan when setting up but it had two very good business minds. In the early days the partners new it was vital to find customers quickly and were extremely motivated to finding these customers. With their cheap marketing techniques and their strong selling skills they soon became established and very strong.

Business Two: This business is more in line with retail and has only been established a few months. It is struggling to break even from day to day and business fluctuates unexpectedly. The idea behind this company is a very good one and offers good services, however, it is not headed by a business person. They accept that they are not business minded but are hard workers and will keep working hard to achieve their goal. This company did not market the company effectively, it has a possibility of strong branding as it is a unique idea but a "shop front" will not do.

From these two businesses you can clearly see where it would have been advisable to have a business plan and even having a business consultant come in and help to produce one.

Marketing Plan, One thing I believe strongly in is marketing a small or new business, you will find thousands of websites which give the advice "once your website is designed you have to show people where it is, people will not just find it", this is also true for the offline world. If you set up a business then you have to let people know it is there. This is where many state-up businesses fail, it's not that they didn't write a business plan, it's that they didn't know how to market their business.

So, to summarize, I am trying to point out that it is not always essential to write a business plan before you begin your business. Your business will change in many ways at the beginning anyway so it would be hard to stick to your business plan. Please don't take this as meaning "you don't have to write a business plan", there is always an advantage to writing a business plan, I am merely pointing out that it is not the be all and end all of setting up a business.


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