Original question from Quora:

How does one create a business plan?

My Answer:

Instead of creating a business plan and giving you a full todo list on that (which others already have done) I am more curious to find out what your goal is…

You see, there are many goals you might have that lead you to creating a business plan and they don’t all include even starting a business.

  1. You might want to start a business.
  2. You might want to get a bank loan for a business and they require a business plan.
  3. You might want to get other investment into your new or existing company.
  4. You might want to make money winning business plan competitions.
  5. You might want a business plan because a college class requires it.
  6. You might want a business plan to prove you know how to plan a business.
  7. You might even create a business plan because you are insecure about your business and you feel like a business plan will fix your insecurity.
  8. Probably a dozen other good reasons I haven’t thought of…

The point is, your reason for creating a business plan is going to have a big impact on what kind of business plan you create.

For example, I knew some guys in college that were starting the sports video software business Hudl. They were building a business from their dorm rooms and cheap office space.

Yet these guys are very clever and smart and they did something really brilliant. They made a great business plan and went around to different business plan competitions and won over and over again.

They picked up checks for like $5,000 or $10,000 a pop, depending on the competition and they won enough of them to fund a lot of their initial business.

Now, I never was privy to read their business plan, so I don’t know how much of their plan was reality, but that doesn’t matter.

Their plan more than paid for itself in terms of ROI. Over the years they’ve built a fantastic business. They’ve even gone on to raise millions of dollars.

Part of that success, but certainly not all of that was from their experience doing a business plan.

So that’s one angle…

But if you are wanting to start a business, you don’t need a business plan at all. The majority of businesses started have no business plan.

Imagine you are a stay at home mom who is good at making little crafts. You decide to start selling a few on Etsy. Over time you sell more and more and eventually you’re making a couple thousand dollars a month in sales.

That is a successful little business with no plan required. If your goal is along those lines, you might not need a plan.

Oh, and another thing.

A lot of people who create business plans never create a business. Seriously, there are thousands of people who create a plan and don’t get funding, don’t get resources, or decide not to start the business.

Even still, creating a business plan could be a useful exercise in figuring out what NOT TO DO, which is as valuable or more valuable than knowing what TO DO.

All of this is to say…

Before creating a business plan, figure out what you really want and if a business plan gets you one step closer.

Sometimes it’s worth it, sometimes it’s not.

-Brian

P.S. I unpack more ideas in Creative Genius.