Is a Business Plan Necessary to Build a Successful Business?

If you look at the statistics starting your own small business is risky at best.  The conventional wisdom says you need to write a business plan because your chances of success are greatly increased if you understand the challenges you'll face and develop a plan to meet those challenges.

But the problem for many new business owners is that writing a business plan seems like a daunting task.  Often new business owners want to make that plan absolutely PERFECT.  They spend so much time working on the plan they don't work on the business.  The reality is that no business is perfect and neither are business plans.  As Iowa patent attorney Brett Trout loves to point out:

When you start a business, who knows where you are going to end up?

Some experts, including Guy Kawasaki, question whether a business plan is even necessary.  Kawasaki points to a study from Babson College that shows there is no difference between the performance of new businesses launched with or without a business plan. 

The findings suggest that unless a would-be entrepreneur needs to raise to substantial startup capital from institutional investors or business angels, there is no compelling reason to write a detailed business plan before opening a new business.

So what do you think?  Do you agree with the study?  Is the "Just Do It" philosophy the way to go or is a written plan necessary to build a successful business?  What strategy has worked for you?

Comments

[Brett Trout]

Rush,

I agree with both philosophies. Get a business plan together with just enough direction to get you moving. Then, revisit the plan every eight months to tighten and tone. Do not overthink it, you are going to revisit it in eight months anyway.

You are right though, if the fear of writing a business plan is crippling you into inaction, dump it and just start moving forward. If you stop moving, you start dieing.

Brett

[Sherry Borzo]

Thank you Rush!!!!

I can admit that I gravitate to what I "know" or believe anyhow. So you're post sits well with me personally.

My little secret is that I have not completed a written business plan that sits in one place and has the title "business plan." This can, on occasion, when talking with a type A entrepreneur be a source of some personal entrepreneurial shame. So I'm happy to hear that sometimes, one can be successful if they don't have a formal business plan.

As an auditory learner, my plan comes out of my head and my heart on an ongoing basis. I'm passion, resolve, honest, ardent with my plan on my sleeve. It's a complex in my head and on pieces of paper and in posts plan. My point is that there should not be a one-plan fits all approach to this development process.

Blogging has been helpful in getting the written ideas to gel though. I also like Brett's opinion on the business plan process.

Thanks to you both for affirming that there is no absolute rule on this subject.