Business plans are an important way to document the who, what, when, why and where of your business. However, they have their place. That place doesn’t include use in an early stage startup.
Why your startup shouldn’t write business plans
If you have worked with me or read my blog often you will know that I am a proponent of using a business model canvas. Doing so allows you to work through the necessary pieces of a successful startup. A business model canvas shares many components of business plans. However, there is one major difference. Business plans are often lengthier documents (from 10–50 pages) and contain a lot more detail. Normally I might tell you that level of detail is a good thing. But, there is one problem with that mindset.
Early-stage startups rarely keep the same business model that they were originally designed under. In fact, I have seen idea-stage startups evolve their business model as frequently as daily. This often occurs because of the amount of prospective customer feedback (read validation) a startup gets in the early stages of their development.
Think about the impact that amount of change can have on a document like a business plan. With so many changes, founders would need to spend hours every week purely on tweaking their voluminous business plans. With a document like an executive summary and/or business plan there is only one page to adjust each time your model evolves.
Why you should write business plans
Business plans come in handy for the founder(s) and employees to use as a living, breathing document that captures in detail how your business operates. It might include details about how decisions are made or what level of authority each founder has in regards to their operational responsibilities. Or it might include drafts of the marketing collateral you plan to use.
You might think of a business model canvas as the foundation, studs, and sheetrock of a house. While business plans are the paint, fixtures, and other finishings.
Now it’s your turn. Do you agree with my thoughts on business plans? Did you write business plans for your ideas? If so, I’d love to see it and share some tips.