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Do I Really Need a Business Plan?

T Paul ThomasSomeone emailed me at Thomas.tpaul@gmail.com several weeks ago and asked if he really needed to have a business plan for his start-up. It was interesting timing because I was working on one of my classes for the fall semester at Northern Arizona University called BizBlock. In BizBlock, we challenge 10 teams of seven business students to create a start-up, write a business plan and then present that business plan to a group of investors in hopes of receiving funding.

A quick confession: I am a planner but I hate doing business plans. As a matter of fact, most of my companies didn’t have a business plan. You would probably be surprised to hear that Google, Yahoo, Apple, Facebook and Disney started without a business plan. But, my mom used to say, “Just because your friend isn’t wearing a jacket in the snow doesn’t mean you don’t have to.”

Will You Need Help From Friends and Family, a Bank or Angel Investors?

If you are kicking off your start-up by yourself and will be self-funded, then you can do whatever you want. If, however, you will need the help of others (and others can mean a business partner, investment or even working with a franchise organization) you must absolutely have a business plan.

You may have all the brilliant ideas and plans already worked out in your head, but the folks who will help your venture grow will need to see it on paper.

Spring Break Without a Plan

I use the Spring Break example in my classes. Imagine if someone approached you at the start of Spring Break and said, “Come with me, I have a great car that is full of gas, stocked with lots to drink and munchies.” It might be fun for a few hours but eventually someone is going to ask where they are going, what they will do when they get there and how much all of this is going to cost.

You Need a Plan

It doesn’t have to be a 50-page document that gets locked in a glass case never to be challenged ever again, but you need a plan. Think of it as a starting point. Based on what you know at this moment, this is what you need to do to succeed and grow.

My advice is very simple. Just put it in writing, whatever your idea is for your product, company or start-up. There are lots of outlines available online but if you want my help, just email me. Call it whatever you want, but the key is that it does not become a static document. I guarantee you things will constantly evolve and change, so view this document only as a starting point for your venture.

Financial Plans and Budgets

While I am not a fan of putting them together, I do believe you would be foolish not to have a business plan for your start-up. Just don’t get caught up in creating a massive document that will put constraints on the business. The Small Business Administration reports that the mere act of creating a business plan will improve your chances for success. And once you do it, you really don’t need to revisit it.

The key to long-term growth and success is in creating annual financial plans and budgets. In my opinion, any business or company that starts the New Year without a financial plan and budget is asking for failure. Yet, as I meet with clients and businesses, I am amazed how many don’t do budgets or financial plans. I ask them how they are able to measure success, failure or growth if they didn’t have some goal or budget in place.

If you are just starting your business today, put something into writing that touches on the important aspects of the business. If you are one of the fortunate companies that make it to the magic four-year mark, then please make sure you are doing an annual budget and financial plan. Make it a stretch but also realistic. If this is something you have never done, talk to your bookkeeper or accountant, or just email me and I’ll be more than happy to help. FBN

 

T Paul Thomas teaches business and entrepreneurship at Northern Arizona University and serves as chief entrepreneur at the NACET Accelerator. Prior to joining NAU and NACET in 2013, Thomas spent 25 years as a serial CEO and president. He can be reached at thomas.tpaul@gmail.com.

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