Having a business plan was once thought to be the roadmap to entrepreneurial success. Its purpose; to lay everything out on the table, including what your company does, its objective and goals, how to market it, and major milestones you expect to achieve.
Some entrepreneurs feel that without a well-written plan, they won’t be able to get their business off the ground and running. But sometimes, a business plan can be your own worst enemy. Here’s why.
Creating a business plan takes time and energy
Time is money, and wasting too much time on a business plan can cost you from bringing in revenue. As Forbes magazine puts it, “The longer you plan, the longer you are not in the marketplace.”
By the time you complete a formal business plan, you could fall behind in the market and miss an opportunity. You may have a great idea for a current problem, and by the time you’ve put together your perfect business plan, the market could move on to the next solution. Use your time wisely.
They don’t always help with funding a business
Raising money to start a business is usually top of mind for every entrepreneur. Writing a business plan to figure out where you’ll get funds from won’t always succeed in getting you the funds you need. Online marketing guru, Neil Patel, explains what investors want to see:
“They want to invest in a business that is up and running. You don’t have to be making money, but they want to see something more than just a piece of paper.”
Chances are, if you send a business plan off to an investor, they’ll skim right through it, and skip ahead to the P&L (profit and loss) statement.
They place restrictions on your ventures
Even the best business plans can hurt the growth of your business. They give you a reason or excuse for not executing on something right away, blinding you to new opportunities. They restrict you from thinking outside of the box and make you less likely to take action. Often, the startups that are the most successful are the ones in which the owner uses his or her imagination and adapts and evolves as they go.
Business decisions happen fast
Owning a business is a constant evolution, requiring you to make decisions on the fly. You could follow your business plan exactly as you laid it out, and later find out that what you are doing isn’t working.
Inc. Magazine writes, “Startups and early-stage companies almost always change direction as the team learns more about what’s possible and what customers want. The moment you execute a pivot, your business plan becomes useless at best and an impediment at worst.”
Trying to stay up to date on one means you’ll constantly be going back to the document to update it for the new path you create. Again, this takes valuable time away from your business.
Test for success
The only way to see if a business is a success is to put it to the test. Predicting whether or not your idea will make it isn’t an option. A business plan can’t predict the future, and it is an outdated way of getting a business off the ground.
The most important thing you can do when starting a business is to stay on top of what is working and what’s not working. Always make sure you are evaluating what’s happening with your bottom line and, ultimately, your customers.