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Do start-ups need a business plan?

Recently I have been thinking how relevant or rather how-not-so-relevant a business plan is for a start-up in this present economic climate. In my mind a business plan ‘is a document that lays out the plan of how a business (product or service) will perform over a given period – usually 1-5 years within a given market’.

Map your route

I remember years ago – 6 years to be exact, when I was setting up my social enterprise; and everyone said I needed a business plan to demonstrate I knew and understood my business – I needed a roadmap. I found this a daunting task I have to say, and reluctantly ‘learnt’ how to write one with the help of some experts.

If you are a start-up and feel any anxiety about writing a business plan, you are not alone! Chances are you have been to see a business advisor and have been given a format with the ‘list’ of things you have to include; you sigh and say ‘if only there are more hours in the day’! Or perhaps you’ve found a template online which has helped you outline your business roadmap. If you think you really don’t need a business plan, well, technically you need some sort of documentation (which you could call a business plan) that outlines some key details of how you are going to achieve your objective – to grow your business.

Should the future be written in stone?

A traditional business plan requires you to outline where you see yourself in 3-5 years and how you plan to get there. In my opinion, they are rigid and inflexible, and prevent start-ups (and any business really) from reacting quickly and creatively to unexpected changes in the market place – a hindrance rather than an advantage; especially in these trying economic times. Nobody can predict tomorrow let alone one, three or five years; so I think it is unrealistic to write any plan for that long.

If you listened to the analysis of the ‘autumn speech or statement’ by the chancellor recently, you will have gathered that 18 months ago, the government laid out their plans of economic recovery for at least the next 4 years; assuring us that we will feel the ‘pinch’ for 4 more years only – a tough pill to take, but really everyone had to get on with it.

Come November 2011, the government has had to revise that to a 5-6 year recovery based on ‘other forces’ – mostly the events in the Euro. The UK has no control over the Euro, although we are not in the Euro, we are linked with Europe in many ways as you know. Some analysts say, we could ‘dip’ back into another recession – a thought I don’t want to contemplate! But it goes to show how planning that far ahead has its consequences.

When you think about it, how far ahead can and should you plan in this economic climate? The lesson for me is to plan, but for short terms – very short terms. It is great to have a vision – the end destination, but your plans and actions should be short towards the end goal.

Forward planning

For any start-ups seeking external investment, you probably have to write a business plan; and my suggestion to you is to plan for 18 months. Be bold and demonstrate you understand the economic situation and base your projections on 18 months; with a clear strategy on monitoring and adjusting things as you go along. Your investor will appreciate that, and have more confidence in you as being pragmatic rather than being overly optimistic (as most start-ups are).

While writing an 18 month plan may suit your investors, the day to-to-day, practical running of your business should be for a shorter period 6-12 months; and if it can be helped, shorter. That way, you are not only pragmatic; but you can react and change direction quickly and effectively if you need to. When we commit to a longer period on paper, it seems ‘set in stone’ and we have a harder time changing direction when we need to.

Small is better

Keep goals, plans and actions ‘small’. Most of your plans would centre on your marketing goals, marketing strategy and marketing plans (Michael E. Gerber says in the ‘E-Myth’ “Your Marketing strategy starts, ends, lives and dies with your customer”); but before you do that you should already have worked out the basics:

  • The problem your idea is going to solve
  • The product or service to solve it
  • Your target audience (primary and secondary markets)
  • How you will reach them
  • Your competitors
  • Price

I say basics; because these are the key elements that tell you if you have a viable business to start with; and create a good foundation to assess what you need to do. Creating a marketing plan is great, but without a solid foundation, all your efforts will be in vain – sadly. So take the time to do that and you can project to reach your targets within your set periods.  Some people may argue these elements are what’s in a business plan, well I would say, some business ideas are not yet viable enough so don’t require a ‘business plan’ or any plan just yet. This is a key point to starting up – having a good foundation.

So keep things small and simple, so they are achievable, and you can realise quick ‘victories’ to motivate you on. For instance consider making shorter ‘to do lists’ rather the long ones that almost never get ticked off. Make small ‘decisions’ rather than those that seem so intimidating or daunting and are often put off; and finally allocate small ‘time frames’ to tasks so you can achieve them quicker and move on to the next. Small bite sizes of actions, allows and gives you the momentum to keep on going. Try it, you will be surprised the difference it will make to you as a business owner and to your business.

Share this article if you found it useful! And leave a comment in the box below. We hope to connect with you soon.

About Viv Oyolu

Viv is the lead consultant at Bounce Point, which helps start-ups brainstorm and test their ideas before they embark on a business plan or sourcing investment. Her experience spans over 20 years working as Marketing Consultant across various sectors. Prior to setting up Bounce Point, she founded Divine Communications Trust (DCT), a social enterprise that creates education resources and programmes for children and young people. Viv is also a radio presenter and interviews small business female entrepreneurs, charting their journey to inspire women of all ages to follow their dreams and passions on her radio show ‘Dream Corner’. In her spare time Viv loves to read non-fiction and crime thrillers; watches football (a keen Manchester United supporter!), golf, tennis, snooker and athletics. Email: viv@dreamcorner.co.uk :viv@bouncepoint.co.uk, Tel: 020 3002 7899, Mobile: 07710 643 828

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17 comments

  1. Couldn’t agree more with the keeping the to do list short and the goals small. Big goals often overwhelm and cause procrastination and lead to inaction. Small goals will look achievable and once achieved, check them off the list and reward yourself to push on to bigger goals. Great read.

    • Hi Yohannes,

      Thanks for stopping by and commenting. You are right being overwhelmed and procrastination definitely lead to inaction – I know from experience. I am pleased you found it a great read :)! Best wishes Viv

  2. Good points here. As a small business owner, I would be lost without some sort of direction that I get from my business plan. I will say, however, that part of my business plan is knowing that my business plan can and will change!

    • Hi Anthony, Thanks for commenting. I think the key is to realise that plans are great to have but have the true flexibility to adapt at short notice. Sounds like you have a good balance. Wishing you every success in 2012. Best wishes Viv

  3. Having a plan and vision is always important whether you are a startup or a big corporation. I agree, it’s not about being rigid with your plans, it’s just about having a plan that will keep your work relevant and targeted.

    • Hi Jon, Completely agree with you! I really want Start-ups (and other business owners) to see that having a business plan these days means having a flexible plan to take them to the end goal. Very best wishes in 2012.

  4. I always recommend to my clients to start with a small, achievable goal. I do this myself whenever I start a new project. For example, if I start a new website, I’ll keep my monthly goal at $300. Once I reach this goal, I’ll go the the next one. My business plan is in my head. I know exactly what I have to do to get customers, drive traffic to my sites. However, someone who needs investors and have a team of employee should absolutely have one.

    Franck

    • Hi Franck, Absolutely, small/bite size goals and objectives are the way to go to keep momentum – a must! As you point out, having them as financial size targets helps as well. Wishing every success in 2012. Viv

  5. Ive noticed that this information really comes in handy because if I don’t first make a plan then I find I end up spending more then my limit of money and I get disappointed if things don’t work out. So I think most importantly having the right plan is a good way to start any project.

    • Hi Tim, I’m pleased this article came at the right time for you! With things being tough financially for most, it may seem like not the right time to start a business; but honestly there’s no right time. The key is making sure you have the basics in place and the amount allocated to it will definitely be used wisely. Wishing every success in 2012…Best wishes Viv

  6. You make some really good point here Viv, I enjoyed the article very much:-) I remember with trepidation the magnitude of angst and challenge the dreaded business plan caused me in my pre and early start up days, and to be honest much of the information it contained was pure fiction, When I look back at it, the only features that bare any resemblance to my business today is that which I was certain of back then and that which I really cared most about.

    So now when solopreneurs ask me, I say, forget business plan to start with. Instead, create a “Heart Plan” Search out your passions, desired impact, purpose and the difference you want to make – Go all out with this step, then work backwards to plan how you can begin to do this over the short term -6-12 months.

    Great connecting! Its been ages:-)

    • Hi Dion, great to re-connect here, and thanks for your comments. I am pleased you enjoyed the article, and agree with you that starting with a ‘heart plan’ is valuable; hopefully including the basics I outlined to make sure the business is viable. Once it’s viable, it is not difficult putting in the long hours because you know there’s an end result. Very best wishes Viv

  7. I think it is easy to confuse a goal with a business plan. It´s not the same thing, you need a map. My partners and I made a plan but changes in the market and our content is making it so we need to revise that plan. It is important to roll with the punches.

    • Hi Rease, I completely agree that everyone needs a map; realising that there could be couple of ways to get to the destination. That means being flexible to take u-turns, or short cuts etc. to get there. Sounds like you and your partners are on the right track – revising the plan (some people are stuck in only going one way!). Thanks for commenting and I wish you all the very best in 2012…..

  8. Hi Viv

    Thanks for this article. I’m six weeks into my new business and have so far resisted putting pen to paper on a business plan, largely because I don’t need any investment so no one has asked for one!

    I have carried out the basic steps you outline in my head and do have a few milestones I want to reach, so perhaps I’ll find time this weekend to make a start on one.

    Thanks for the inspiration.

    Louise

    • Hi Louise, I am so pleased you found the ‘basics’ helpful. I have been there before, and realise if I had those basics outlined, things would have been different. Best of luck getting them done, and hope you realise your dreams and goals in 2012….Best wishes…

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