Yes, your startup still needs a business plan


Yes, you should write a business plan – just because you’re a startup doesn’t mean you won’t need it.

I know business plans aren’t in vogue. They’re not popular. Many of the startups that I talk to either don’t have one or laugh at the idea of writing one.

They’ve read the Lean Startup and all they’ve taken away from the book is “fuck planning, startups don’t need it” — which totally misses the entire point of it.

So when I ask them about their business, they’re vague. Vague, unfocused and messy. They don’t have their stories straight, or their products straight, or a clear vision for where the company is going. Each individual member of the team has a completely different concept in their heads.

A business plan isn’t necessarily what a VC firm are going to want to see — although trust me, they don’t hate them as much as startup scene kids think — but it is a pretty vital document for most young companies. Because creating a business plan puts everyone in tune.

Even lean companies still need a business plan

I know the lean methodology, and it works extremely well for product development. In an ideal world, it would work for building a company in the exact same way.

Unfortunately, a company is an organisation that does need something else to hold it together, because all it really is, is a loose collection of people who are vaguely aligned in a business sense.

That’s the purpose of a business plan, it’s to give everyone involved with a company a clear document that lets them know whether they’ve won or lost, grown or stagnated, met or missed their goals.

A business plan doesn’t need to be complicated, and it could start out only being a few pages of clear language that expresses the following things:

  • What your product is, and what it does, and why
  • Your strategy for bringing that product to market
  • Details about your revenue model
  • Goals and milestones
  • The method you’ll use to know if you’ve failed
  • Your customer personas and target market
  • Your financial needs

Don’t stress about trying to churn out an overblown, old-school-MBA business plan that takes up 60 pages and has a complete appendix.

In fact, I would try to keep your plan as short and sweet as possible. When I write a business plan, if I can’t express the whole thing in less than 10 pages, that’s my first hint that the business is too complicated, or I don’t understand enough about it.

When you first write it, your founding team should all be involved. This is your chance to hash out the differences and discover whether anyone is out of sync. You can analyse their points of view, and work to define what your startup is trying to achieve in terms of product development, growth, business model and culture.

Your business plan is the working blueprint that you’re going to be using to create a company together, and it’s important that everyone on the founding team has a say in it.

If you’re a sole founder, try to pull in some people you trust who can work with you on the plan to challenge your ideas and preconceptions.

Creating a plan is a team exercise

I think a startup team should come together to work on a business plan as a regular, on-going activity.

It’s not a document that gets finished and thrown away, it should be something that is looked at and worked through on a monthly basis. That kind of activity will make sure you don’t veer off course or lose focus, and it will prevent anyone from your team from losing track of what they should be doing and what their role is in the company.

Once your document has reached its first draft stage, in that it hits all the right points and includes all the necessary information, make it the focus of a monthly session where you set aside a strict 30 time limit to walk through the document and ask the following questions:

  • Are we following this plan?
  • If not, is there a good reason that could show a problem with the plan?
  • What goals have been reached?
  • What’s changed in our strategy?
  • Does the plan still represent our company?

I think there’s something dangerous about completely rejecting traditional parts of business planning and operations. There are founders out there who have read all the current books, and are up to date with the latest ideas in startups, but they don’t know the basics of business.

They’re in the kitchen trying to follow a complicated recipe, when they’ve never learned how to preheat an oven.

Call me crazy, but I don’t have a lot of faith in those entrepreneurs. They’ve forgotten that a startup is a business, and it needs the same amount of groundwork. Rejecting a business plan, the concept of it, because it’s not in vogue is a short sighted thing to do.

You might call me out on this, and maybe you’ve got the years of strategy experience to tell me I’m wrong. But most younger entrepreneurs, starting out with their first company, don’t have that knowledge. They’re fumbling blind, and they don’t know the ropes.

For them, a business plan is going to be a crucial document, because writing it and analysing it is going to keep them moving forward, with a clearer idea of what their company is, what it’s not, and what they want it to be.

This article was first published on Medium.

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Jon Westenberg is an entrepreneur, startup advisor and writer.