Another MindMaps ZA Meal – Food for thought to fatten your insights: Article Review
Article: Business Planning
Tagline: Does a great idea really require a business plan?
Author: Rian Malan
Source: MindMaps ZA
Discover: Arguments for and against business plans
Salient Content
There are arguments for and against planning. The article explore this issue and concludes that working through the process, at least, is essential.
Nourishment
The value of working through the process of planning is that it enforces creativity – getting you to think about your options.
Business Planning – Does a great idea really require a business plan?
How many people have not asked this question, “If I have a great idea, do I really need to do a business plan?” The first reaction from business advisers is normally one of astonishment. “How can you ask such a stupid question? Of course you need a business plan!”
I did an interesting exercise by asking Google. “You need a business plan” produced 4.65 million results, while “you don’t need a business plan” produced 1.31 million results. Does this conclusive indicate that you do need a business plan to make your great idea work? I don’t think so.
You don’t need a business plan
The advocates for this viewpoint argue that once a business plan has been done completed, nobody ever refers back to it. So, why do it in the first place? Another argument is that business plans are just guesses, and they’re almost always wrong.
Three other “good” excuses are:
1. I Have It All In My Head;
2. I’ll Deal With The Challenges As They Come, and
3. A Business Plan Won’t Help Me After Start-Up.
You do need a business plan
The other side of the coin says that you indeed need a business plan. There are many sources and references on this, and we have listed some of those on our website. Some even go so far as listing 15 “good” reasons why should have a business plan.
From all the research we came up with a rationalised list of reasons that we believe make the case for a business plan in a compelling way.
1. You need a loan or investors
Whether you believe in doing a business plan or not, if you want to approach a bank or investor you have mo choice. That is the first thing they will ask for. In this case it will be wise to approach the bank(s) and / or investors to find out if they have specific guidelines or criteria that have to be met.
2. It is the most valuable investment that you are making
Even if you don’t need outside funding, you are going to make a huge investment in time, money and resources to start your own business. If outside investors won’t budge without seeing a plan, is it not more important that you, as inside investor, should do the same?
3. It forces you to be proactive rather than reactive
The process of formulating your business plan forces you and helps you to identify possible problems or obstacles that you may encounter down the line. There are enough day-to-day problems and challenges in running a business and the last thing you need is to come up against a brick wall that could have been foreseen.
4. It makes you “master” of your business
Forcing yourself to at least go through the process of compiling a business plan gives you the edge and puts you firmly in charge of the business as you will not only have the big picture, but will also get to know the bells and whistles of your business. If you don’t do that there will always be question marks on your mind that may hinder you in the execution of the plan.
5. It enforces creative thinking
To us this is probably the most important and compelling reason why you should do a business plan. Business today is all about creativity and innovation – both in terms of products and / or services but also about strategies, tactics and processes. The process of doing a business plan forces you to make decisions on a wide variety of important factors such as your marketing plan (the core of a business plan). In making these decisions you are forced to look at options and and forced to question decisions.
There are a lot of other reasons why you should do a business plan, or at least work through the process of planning. Our conclusion is that it is essential. It need not be a laborius and drawn out process, and the complexity will differ depending on the scope of your plan. If this does not help you to get clarity, have a look at some of the articles in our Business Plan Article database, or do some more research yourself.
There is a third approach, namely to first test your business model before you do a plan. We we will briefly look at this in the next article.
Happy planning. Make it a fun, challenging and exciting experience.
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