Original question from Quora:
How does one create a business plan?
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.
- You might want to start a business.
- You might want to get a bank loan for a business and they require a business plan.
- You might want to get other investment into your new or existing company.
- You might want to make money winning business plan competitions.
- You might want a business plan because a college class requires it.
- You might want a business plan to prove you know how to plan a business.
- 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.
- 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.
P.S. I unpack more ideas in Creative Genius.