Many new startups go into business without a formal business plan. Many do so because they have no idea how to write a business plan and others do so because they do not see the need for a business plan. And others know they need one, but they are not sure if it would really help them as much as everyone says it would.
If you are in need of financing for your new business a business plan is a must to have. Your bank will not even look at your loan request if you do not have a business plan. If you are out for venture capital the same thing can be true in many cases. Some Venture Capitalists require a solid business plan so that you do not waste their “valuable time”.
So, if you are one of those that do not know how to write a business plan, this task can be a curse. Where do you start? What needs to be written in a business plan? What is the right format? How long does a business plan have to be? I can see people lose sleep over these questions easily. But a business plan is not that mysterious a document and it actually can help you to start a better business. Don’t think of it as a business plan, but as guide that provides better direction.
The biggest problem with business plans from my experience is the financial piece. It can be very hard to put numbers in it and forecasting sales and revenues. Everything else is really just describing your business and what your overall idea is and how you are going to execute that idea towards success. A more formal business plan should have a certain structure to make it easier to read, while a less formal business plan does not need to have it set to the same detail. It really depends on who you write that business plan for. From my experience it is best if you write the business plan for yourself. As mentioned, use it as a guide where you put down your overall idea and plan for your business. Starting a business is a busy time with lots of stress and it is easy to forget a few things. Having them written down is a great way to keep track of everything and to review things and its especially helpful if you feel stuck and are not making much progress.
Once you have this “guide” written and in place the actual jump to a formal business plan is small and not very time consuming. So, once you get to the point of needing more money and are looking at a line of credit from your local bank or want to get some venture capital you are almost there. No need to lose sleep over a business plan at that point. There are many business templates available on the Internet you can choose from or you buy a business plan software for that last step. Only in a few cases it makes sense to hire outside help to get the overall business plan worked out. Preparation is key and good banker or VC who sees the potential will not kill your request for money just because your business plan does not come from an outside consultant.