When it comes to starting your own company, nothing is more controversial than the preparation of a business plan.
Mixed reviews abound on whether to spend time writing a business plan rather than just starting the business. Like many business decisions, it depends.
Do you need funding?
Are you even experienced enough to obtain funding?
These and other questions will help to determine whether or not valuable time and money should be spent writing a business plan or if resources could be better utilized chasing opportunities.
Certain scenarios absolutely require a written business plan.
If you are seeking funding from venture capitalists, private equity firms, angel investors or even SBA lenders a polished business plan is an absolute must. Such a plan will include everything from finance and marketing to business operations and everything in between.
Unfortunately for the young would-be and budding entrepreneur, obtaining millions in venture funding at an early age is the exception rather than the rule.
In most cases, venture funds are seeking out proven entrepreneurs with a previous, successful track-record. However, that doesn’t leave out friends, family, angels or other creative funding options which don’t necessarily require planning.
It also doesn’t mean you can circumnavigate writing your plan. In fact, it may mean the opposite. If wealthy Uncle Jack is going to be footing the bill for your chain of smoothie stores, he’ll probably want to see some financials as well. If you are a proven manager with a long-reputed track-record, you’ll most likely still need a plan, unless you know the fund manager directly.
I know of several rare cases where experienced entrepreneurs were given little more than a handshake to obtain $2 million+ in venture funding. The terms were ironed-out later.
Again, never treat the exception like the rule.
If you want funding, you’ll need a plan. If you want a plan and have little experience writing one, you may need some outside assistance.