Just wondering how many of us actually started up with a well laid out business plan? Or perhaps you just skipped the thing?
Define “business plan”.
If you mean a nicely polished Word doc with cover page that a banker would consider looking at, then no.
If you mean researching the competitive landscape, interviewing potential customers, listing probable expenses, estimating number of customers based on possible marketing strategies, planning timeframes for business milestones, examining possible legal liabilities, etc, and keeping all that info in a hodge-podge of notes, and updating these notes as you progress and discover more, then yes.
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This. ^^^
I have done business research for several things I wanted to start, but none of that research took the form of the traditional business plan that you might submit to a bank to get an SBA loan.
I always start with a business plan – complete with financial projections. It’s an old habit I got from years of raising financing for various startups. The idea is not that everything is going to pan out – it’s that you get to examine the business from every angle and avoid nasty surprises.
Also, a business plan should be updated over time to reflect the state of the business. It should also lose pages over time as less and less details are required.
Then again, I’ve also seen some people start businesses with nothing more than a vague idea and succeeding anyway. So, I’m not willing to say that a business plan is absolutely necessary. Having a running prototype of a product is far more important as you can use it to gather feedback & gauge interest before investing more time and money.
I’m with @Oliver.
In my experience, the best way to think of a business plan is as a research tool. Collating feedback, online research, high level tasks for a minimum (embarrassing but launchable) product.
Pre-customers if you have a spreadsheet that is more than one laptop screen in size, stretches over multiple tabs or involves a graph with revenue curving up and to the right, you’ve created a work of fiction. I’ve seen a lot of make-believe revenue projections and written a couple too.
By all means give yourself an idea of money stuff (particularly on realistic costs) but until you’re actually selling something it’s too easy to lie to yourself.
Nice to hear I’m not the only one who doesn’t have a nicely laid out plan. I personally manage the all business workflow, projections, estimates as well as product management, with one only spreadsheet (made of 20 tabs though) and a plentora of side notes. If I would translate all of this data into liveplan.com, I would probably have a ad-hoc business plan in minutes.
And it seems we are not the only ones who wonder about the matter - just came across this interesting research by Jan Brinckmann: http://www.sciencedirect.com/science/article/pii/S0883902608001109#!
P.s. wondering if Mark Zuckerberg and Edoardo Saverin had a business plan back then.
I started my freelance business with a business plan. Because it was a document for my own benefit (not to raise funding), I kept it short and relevant. The main purpose for me was just to think through things from a variety of angles, even if some sections were just a couple of sentences. I could then review that document on occasion and update it, which was a benefit because it helped me see how I deviated in certain respects, and reflect on why. It is just a tool to gain insight and encourage thoughtful consideration, not anything written in stone.