Is It Time to Kill the Business Plan?
Let’s face it: business plans suck.
They’re a pain to write and people rarely read them cover to cover. Could it be that it’s really time to kill the business plan once and for all?
It’s truly an interesting question. There’s no doubt that writing a detailed, traditional business plan can take some time—time that could be spent getting a business up and running.
As Mike Tyson has famously said, “Everybody has a plan until they get punched in the mouth.”
He meant that all plans seem well-thought-out until something goes wrong. So, your plan might look great on paper, but it becomes instantly out of date once you actually start talking to customers and learning what’s really going to work and what won’t.
A business plan needs to be flexible
As soon as you get out in the real world, your plan is going to have to change and adapt. So, why bother? Wouldn’t writing a business plan just be a waste of time?
But, there’s the unavoidable research about the positive impacts of planning to consider. Studies show that planning and tracking your progress makes you twice as likely to achieve your goals. Other studies show that planning can help businesses grow 30 percent faster than businesses that don’t plan.
So, what’s an aspiring entrepreneur to do? Dive right in and skip the business plan? Or write a plan that’s going to need a complete revision the second that it’s complete?
A better business planning process
It turns out that you can have it both ways. You can kill the business plan, but only if you replace it with a simpler process. The most effective way to plan isn’t with a single long business plan document, but with an ongoing business planning process that evolves over time.
That process is called Lean Planning. Here’s a quick overview:
- Instead of writing a lengthy business plan, you start out with a one-page Lean Plan that you can create in under 30 minutes.
- Get out into the real world and test your idea. This is the part where you get “punched in the mouth,” as Mike Tyson says.
- Review your results, and that includes taking a hard look at the three main financial statements. What do you need to change in your plan?
- Adjust your plan. Because you started with a one-page Lean Plan, this is a simple, painless process.
With the Lean Planning process, you continue to repeat each step as you learn more about your business and your customers. Instead of spending days (or weeks) writing a detailed business plan, you’re using a business planning process while you’re starting your business.
You’re accomplishing both the planning task that is proven to lead to more success and simultaneously starting your business so you’re not wasting time.
The key to Lean Planning is to remember that it’s a process, not a document. Business planning isn’t about creating a single document—it’s about setting goals and revising those goals over time.
And, there is a place for the “complete” business plan—the longer document. As you figure out what works and what doesn’t for your business, you should document the strategies that work. For example, once you have a marketing strategy that works, write it down so it’s easy to get new employees up to speed.
The other reason you might need a longer business plan document is for the fundraising process. Some investors and lenders may ask for a plan, so you should have one ready if they do ask. It doesn’t need to be a novel—10 pages should do it. Even if investors don’t ask for a plan, going through the more detailed planning process forces you to have answers to all the questions investors are bound to ask you. By building a complete business plan, you’ll be forced to think about those questions and have answers ready.
At the end of the day, the need for a traditional business plan might be changing, but the business planning process is still alive and well.
Editor’s note: this article originally published in 2017. It was updated in 2020.