The traditional business plan will always
have a place in the world of entrepreneurship.
“Startup businesses need a plan,”
agrees Steve Radley, CEO of NetWork Kansas. ”A business plan provides a good
map for that plan.”
Diving in to a new business venture
can be exciting, but ultimately if a business is unprepared, it will likely
mean lost time, revenue, or worse – costly expenses and missed opportunities.
There are too many stories of a
business that realized too late that they needed to file a certain license,
reach a different market, or entirely revamp their product. While these
learning pains are part of growing a business, a well-prepared venture can
minimize losses and maximize gains. Business plans are also important for
recruiting funding, especially at the startup stage, but also during expansions
and other transitions.
“I believe a business plan is vitally
important to the success of a startup business. A properly-done business
plan will help the entrepreneur identify and answer the important
questions that need to be addressed long before the bank loan is applied for,”
says Erik Pedersen, Director of Entrepreneurship Communities at NetWork Kansas.
“A business plan will help address competitive environment, market
research, staffing, inventory, etc.. all of which are important to
ensure there is a market for the product or service and that sufficient startup
capital is being applied for.”
The purpose of a business plan
varies, depending on who you ask. Too often, entrepreneurs create a business
plan simply to qualify for bank financing, instead of using it as a tool to
chart their course.
“The danger of a business plan is
when an entrepreneur does a business plan just because a bank requires it,”
cautions Radley, “Entrepreneurs
must also understand that a
business plan doesn't guarantee success but can help reduce the chance of
According to Tim Berry in an article for
Entrepreneur magazine, the fundamentals of a sound business plan include the
- Business and results-focused
(instead of emphasizing style, formatting, or writing)
- Facilitates ongoing planning
(the best plans are a process)
- Manages change (assumes
change will happen)
These principles are timeless. Yet,
current business plans need to be able to weather a rapidly changing world.
They need to be revised more often. Instead of sitting proudly on a bookshelf
gathering dust, these are living documents that should be reviewed as often as
every few weeks and changed.
This is easier than it used to be,
because business plans today are shorter – perhaps as brief as 10 pages.
Business plans should also be easy to
access, and result in a different generation of information. Digital plans,
available instantly from an online network, are a good way to keep the road map
handy. Information like an elevator pitch and executive summary can be fashioned
from a good plan’s content, making a business plan a productive tool instead of
While lengthy documents produced at great
cost for a third party’s sole benefit are relics of another age, doomed to
extinction, a good business plan is still an invaluable resource for a company,
especially when used as an evolving document. Rather than a finite encyclopedia
of a business’s projected progress, a good business plan is like an early
explorer’s map – constantly evolving to color in details of a world not yet
discovered. This kind of business plan has a long, long life ahead.
Content contributed by Anne Dewvall, NetWork Kansas. NetWork Kansas
is a proud affiliate of U.S.Sourcelink
, America's largest resource network for entrepreneurs.