Why you need to go back and do your business plan

Photo credit: TvLith.

Starting up a company can mean innovating and defying business traditions. This is the classic message that I have read in a lot of articles about startups. While I haven’t gone to the extent of researching the business success of these authors, it is alarming that many are taking these types of advice seriously.

For example, in a recent article that I read,  business plans were described as slow and wasteful. I have received a few queries as well from aspiring startup founders on whether they should go ahead with incorporating their business since they already have a big idea. I would always ask the question:  how’s the business plan looking? Sadly, eight out of 10 respond that they haven’t made one.

It is striking to me how many people are aware of what a business plan is yet they either don’t know how to do it or just simply don’t want to do it because that’s what other people recommend. One of the most obscure reasons that I’ve ever heard is that preparing a business plan defeats the goal of agility in business. So, let me give you three reasons why every entrepreneur needs to go back to the drawing board to build a business plan.

Formalizing your business’ road map

A well-made business plan is a road map detailing an assessment of what you need, how you’ll get paid, financial indicators, and a plan on how you’ll attack the market. Yes, this is a tedious process and might take a bit of time, but hey, planning pays well.

Many startup founders came from a fixed salaried job and have had many things go crazy after starting a business. There are significant changes like varying salaries, having to manage administrative stuff, and doing financial management for the business. But you won’t be surprised by these changes if you have already realized them while working on your business plan .

Market and industry analysis

This is where many newbies to business, or even those new to managing a business, can fail. A lot of startup founders are driven by their ideas and passion, but don’t have a strategic mindset . This is one reason why many startups fail. Understanding your market and industry is crucial if you want to play there. Your bright idea matched with reasonable prices is a nice combination for getting your idea out in the market.

Market and industry analysis is one of the most time-consuming activities that a business must do. The time spent on this may be significant, but you don’t just attack without understanding your opponents. So, spend some time researching and learning about them.

Business structure

This is probably the most ignored topic in all business planning sessions. Many entrepreneurs assume that being incorporated is the right way to move forward. For some, it is going with a partnership structure without understanding the risks involved.

Make sure your business structure suits your business model and objectives. Seek advice if you’re not sure because at the end of the day, you won’t be doing this again in a short span of time.

That’s it for now. Creating a business plan might not be as agile as simply completing a business model canvas or doing a javelin board. But being agile is not always worth the risk of failing afterwards. Learn to play things right — it’s not the number of failed startups that count as grit.