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.

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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