Yes, you have to write a business plan, but no, that doesn’t necessarily mean what you think it means.
We’ve touched briefly on this issue before, so you may already know our answer: Yes, you have to write a business plan, but no, that doesn’t necessarily mean what you think it means.
Many people have this idea that starting a business requires spending lots of nights and weekends hunched over a computer screen at a dimly lit kitchen table writing and revising a masterpiece of a business plan that rivals Moby Dick in the scope of its ambition before they ever open their doors.
We don’t recommend that you follow that approach for two reasons: (i) if you’re like most people, then you’ll probably find it difficult to knock out that many words that quickly and (ii) at the moment, you just don’t know what you don’t know, so you might spend a lot of time writing about a piece of your business model that won’t actually work in the real world. The result? You’re going to delay your opening without a great reason for doing so.
Now as a matter of full disclosure, we’ll confess that Haven actually does have a traditional business plan for our own business, and one that clocks in at thirty pages, single-spaced, no less. It doesn’t quite have aerial photography in 8x10 glossy photographs with circles and arrows on them with a paragraph on the back of each one explaining what each one is, but you get the idea. But in our defense, we were required to submit a business plan for a competition in which prize money was at stake. Otherwise, we probably wouldn’t have put that much time into it until much later.
Here’s what we recommend that you actually do: For starters, download the Business Model Canvas. (Yes, Strategyzer uses it as a free PDF lead generation tool, but if you’re allergic to handing over your e-mail address to their marketing team, then you can find totally free versions all over the place, such as here.)
The Business Model Canvas was designed by Alexander Osterwalder back in 2005. Strategyzer uses it as the basis for their training, and startup investor Steve Blank uses it as the basis for his very popular online course How to Build a Startup. Because of their influence, SaaS companies like Haven use the Business Model Canvas all the time.
But that background aside, don’t make the mistake of thinking that the Business Model Canvas is limited to tech startups. What the Business Model Canvas really is is a blueprint for understanding and analyzing the business model of a particular business. Any business. Including yours. It doesn’t matter whether you’re starting a butchery, brewery, or bakery, going through the mental exercise of filling out a Business Model Canvas will get you to think about your business as a business in an abstract sense--an economic firm that tries to combine resources in the most efficient way to produce a good or service that a particular type of customer actually wants while making sure that customers are actually aware of what’s on offer through marketing and advertising.
But the really nice thing about the Business Model Canvas is that putting one together won’t become a gating item that stops you from actually getting around to starting your business like writing a 50-page novel of a business plan can. We can’t stress that enough. The Business Model Canvas is quick and easy to use to put together a first draft--and you can quickly and easily change it if something isn’t working--so it’ll help you get into business. The risk of a business plan is that you’ll treat it like a chore to be procrastinated, which will delay you from getting into business.
Okay, so you’ve filled out your Business Model Canvas, you’ve gotten into business, you’ve realized that some of your theories about your business weren’t quite correct, and you’ve made some changes to your business model. Now you can start writing your business plan. But we still don’t want you spending lots of nights and weekends hunched over that computer screen at your dimly lit kitchen table like you’re writing that Great American Novel.
A better approach to the business plan is to lay out section headings for all of the major topics that you know you’re going to have to think through and then write down, in as few words as possible, your current working theory for how your business will address each one. Here’s a hint: You’ve already thought through those ideas when filling out your Business Model Canvas! Now all you have to do is articulate them in complete sentences. Easy!
Even at this stage, some of your initial answers may still be wrong, but you can revise them as you go. You can also add more detail to these sections when you feel more confident that you’re truly on the right track.
Used in this way, a business plan is what it should be: a living document that you return to on a regular but not too frequent basis to revise and update as your thinking about your business changes. Treat it as a useful exercise that forces you to examine your assumptions, think about what’s not working, and make changes. You may ultimately never even finish writing it. And here’s a dirty little secret: We actually don’t care if you never finish writing it so long as the exercise helps you run the best business you can!