Is it Possible to Succeed Without A Business Plan?
Posted by Matt Krautstrunk on April 11, 2011 in Business Start Up Advice [ 1 Comment ]
Some may say, creating a solid business plan in 2011 is like tying your hands back and jumping in to a rushing river. Not only are solid business plans limiting but they may fail to understand your businesses core competencies. You may say, “I need a solid business plan to raise money,” but this isn’t necessarily true. For most startups it is okay to have a basic outline of your plans to make money and compete, but highlighting a full 3 year plan for your business will limit the opportunities your business has.
PayPal Take for example co-founder of Paypal Max Levchin. He initially set out on his business endeavors to create a business security software with cryptography technology. However as he began implementing his technology in other applications on the web he realized that their was opportunity in the mobile payment industry. He developed a secure way for businesses to transfer money, re-defining an industry that at one point in time didn’t trust online payments.
So how is, not creating a business plan different than floating aimlessly? A business plan is often mistaken for a business that lacks preparation of the future. In fact it may be the opposite, it may benefit your business more by planning for the future but adapting to changes in competition, target market and other opportunity.
You can never account for anything, and unless your business has already secured a client list what do projections mean? I’m willing to bet majority of investors would rather invest in somebody who has done it, and failed than purchase a speculative plan. Market research is never as effective as trial and error.
Your Business Will Evolve
The most fundamental argument against preparing a formal business plan is the fact, your businesss evolves. In this day and age, if you want your business to remain current you will need to adjust to changes within the industry. How much has changed in the past 2 years, let alone 5 years? If you made a business plan 3 years ago, you likely wouldn’t include a comprehensive approach to leveraging social media marketing. Technology will be constantly changing, no matter what industry you are in. The best thing your business can do is lean your operations, making your operations flexible and ready to embrace change will help you become a first mover.
Whether you are looking to create a plan for the future to impress angel investors or think you are preparing for the future. The truth is you can better spend your time by re-focusing your business on innovation and growth. Rather than focusing on what you are going to do in the future, understand what you do well and only plan for how you can move these competencies in to the future.