As reported last week in the New Your Times , a University of Maryland business school study concludes that:
GO ahead and write that 50-page business plan about your fledgling venture if it helps you to focus. Just do not bother showing it to venture capitalists, because it will do nothing to improve your chances of getting financing.
Yes, it’s true, many investors will not read a business plan. And a full business plan is usually not a very compelling way to initially get an investor’s attention and generate excitement about your business. And let’s face it, it takes interest and excitement to motivate someone to read a business plan.
But as suggested in the article, doing “business planning” is important. I like the way Pamela Slim, author of Escape from Cube Nation, put it in an interview with Guy Kawasaki :
You don’t have to have a complex business plan with thirteen attachments and spreadsheets, but you do need to engage in business planning. Know the kinds of problems you are trying to solve, and what value solving them would bring to your customers. Get clear on resources needed to bring your business to life. Start by guessing how many widgets you plan to sell, so at least you have a good laugh the next month when you look at actual sales. But as business planning guru Tim Berry told me about projections, they are only guesses for a month. After that, you have real data to compare. So move quickly, test often, fail fast, and discuss and document your assumptions. If you keep everything in your head, you will limit your creativity, and in the long run limit your growth.
So yes, planning is important. Writing it down is important. But filling in a 50 page outline of a business plan so you can put a check in that box – that, by itself, doesn’t necessarily do you much good!