Times they are a’changing. Starting and running a business is a completely different animal than it was even a decade ago. Long gone are the days of 50 page business plans, complete with executive summaries, detailed financial projections and pages upon pages of fluff.
Why are businesses doing away with the traditional business plan? To sum it up, because they’ve become all but obsolete and in most cases even investors don’t read them. In fact, according to a study conducted by author David Gumpert, 98% of investors reported that they could become interested in a company even if that company doesn’t have a fully written business plan
That doesn’t mean you should go all willy nilly and start a business without any direction or research. It simply means that you may want to reconsider before you set aside a month of your valuable time to map out the most detailed business plan in the history of the world. Here are four reasons traditional (ie. long and boring) business plans can do more harm than good to your startup or growing business.
1. Business plans focus too heavily on external forces.
Traditional business plans put a major emphasis on external factors such as financial projections, advisors and numerous other things. It’s not that these things are unimportant to business, it’s just that they’re not the most important thing in determining a business’s success.
The bottom line is, much of your business success depends on YOU. It’s been said that a majority of business failures can be traced back to a people issue, and not a financial or marketing issue. If you’re trying to launch a start-up, or grow your existing business, your time would be better spent focusing on your key strengths and figuring out how to capitalize on them.
2. Detailed planning boxes you in.
By writing out an endless, detailed business plan, odds are it will end up boxing you in more than it will play to your advantage. Business success requires flexibility and the ability to adapt to changing market conditions and customer demand. By forcing yourself to write and subsequently follow an overly detailed plan, you limit your ability to chart a new course for your business, that may be even better than what you originally intended.
3. Most successful businesses never follow their business plan.
How many times have you made a plan (in business or life, in general) that has gone exactly as you’d planned? I’d venture to say never. If you look at most successful business plans, you’ll notice a vast majority of them haven’t followed their original business plan. And if you’re not going to follow it, why spend your time on it when there’s so many other things to be done?
4. The longer you’re focused on the plan, the longer you delay action.
Forbes Magazine recently published an article about business plans being a waste of time. In it they point out, that the longer you spend on your business plan, the longer you delay taking actionable steps towards your business goals. And the longer you delay action, the longer you delay revenue. While you’re busy planning, you might also fail to recognize changing market conditions that could have a huge impact on your bottom line.
So If I Don’t Create a Business Plan, Where Do I Start?
Remember how I mentioned that even without a business plan, it’s important to do your research and have direction in your business? That’s precisely where to start. Start with researching your target market and study who they are, where they hang out and what their buying patterns are. Before you dive full fledged into planning, you need to make sure there’s a market need for it.
From there, many modern businesses and startups have exchanged the traditional business plan for “The Business Model Canvas” or “The Lean Model Canvas”. The Business Model Canvas came to popularity through a book written by Alex Osterwalder, and The Lean Model canvas is an adaptation of the original, revised by Ash Maurya.
Essentially both of these are extremely condensed versions of the most important parts of a business plan, mapped out into chart format. They include important things to consider when business planning, such as; key partners, channels, customer segments, problems, solutions and unique value proposition.
Completing a Business Model Canvas or Lean Model canvas on your business idea is an efficient alternative to developing a detailed business plan. Both models give you an idea of what your key actions are, who your partners should be and if your business idea is legitimately viable. In addition, most modern VCs and angel investors have shifted to asking for these types of business plans, versus reading through pages of traditional business plans.
In the book Venture Deals by Brad Feld and Jason Mendelson, they said this about business plans, “We haven’t read a business plan in over 20 years. Sure, we still get plenty of them, but it is not something we care about as we invest in areas we know well, and as a result we much prefer demos and live interactions.”
At the end of the day, there’s no substitute for research and charting a good course for your business. But your time is definitely better spent taking a minimalistic approach to business planning, so you can begin taking action in your business as soon as possible.
Byline: Blair Nicole is a Media Relations and Startup guru by profession and a writer by choice. She’s the CEO and Founder of Media Moguls PR; not your grandpa’s PR company. Blair is also a digital nomad, philanthropist and writer for a handful of high tier business outlets.