BUSINESS PLAN, SCHMIZZNESS PLAN!

"Badges!" "We don't need no stinkin badges!" Business plan...we don't need no stinkin...

I've had countless people ask me if they need a business plan to start their business. My answer is, no. You don't need a business plan to start your business, especially if you have the following:

• a high tolerance for pain
• a strong desire to fix something ten times when it could have only taken one or two iterations
• a love for winging-it
• a belief that starting a business is too easy and you would like to make it more of a challenge
• a passion for working with partners, vendors, and employees that all have their own idea of who the customer and competition is

(Oops, was that overly sarcastic?)

Oftentimes an entrepreneur's argument for not having a plan is their market, industry, and customer behaviors change and shift too fast. They state that creativity, vision, and innovation are what drive a new start-up. Agreed, however, a solid dose of logic, rationale, and methodology wouldn't hurt either. A business plan should house all of the above. A recent blog by Matt Winn highlights the need for both both types of focus.

I won't ramble about all of the reasons why you should have a plan. You can access Susan Wu's thoughts on business plans to see some reason's why. However, I will give you a quick "in the trenches" example of how they can help:

Recently, we were working with an entrepreneur who was selling her product direct to customers on the internet, as well as at trade and event shows. We convinced her that it was time to move her idea from Business 1.0 to Business 2.0. We started with following the process of writing a simplified business plan, which inspired her to think through many tough questions. After researching, questioning, and "penciling out" some numbers in a spreadsheet, she realized that she needed to improve her inventory turns (velocity) to really maximize her profits. This prompted her to consider the larger distrubution vehicle of selling her product through existing retailers. She initially didn't think this was a good idea because the margins were smaller, but after working through her plan she realized the volume more than made up for the smaller margins. In her case, the business plan removed a ton of dangerous guesswork.

My point: have a business plan.