3 Excuses That Reduce Your Chances For Success
Most entrepreneurs avoid writing a business plan until they’re confronted with the ultimate obstacle—a need for outside funding. The first question out of a lender’s mouth, whether an angel, venture capitalist or banker* is inevitably, “Can I see your business plan?” If you don’t have one, the conversation ends there. Most entrepreneurs avoid writing a business plan until they’re confronted with the ultimate obstacle—a need for outside funding. The first question out of a lender’s mouth, whether an angel, venture capitalist or banker* is inevitably, “Can I see your business plan?” If you don’t have one, the conversation ends there.
So if you’re unsure about needing a business plan, or if you’re sure you don’t need one, you should ask yourself the following questions—just one “yes” means you need a business plan.
If you’re a start-up:
- Do you need outside funding (i.e., loan money from someone else)?
- Do you know where you want to go and how (exactly) you’re going to get there?
- Do you want to avoid as many mistakes as possible?
If you’re an existing business:
- Do you need outside funding?
- Do you feel like your business is running you rather than you running your business?
- Do you want to be more proactive and less reactive?
A business plan is an invaluable investment of your time and effort, regardless of whether you need outside financing. I liken it to eating your vegetables—you may not like it, but it’s good for you. Why? Because a successful business needs a solid foundation from which to grow.
What follows are the three most frequent excuses entrepreneurs use to rationalize why they’re not writing a business plan. Since a business plan can mean the difference between success and failure, be sure not to fall into this trap.
1. I Have It All In My Head.
Putting words to paper forces you to focus on exactly what you plan to do and how you plan to do it. Think of a business plan as a road map for operating your business. How do you know where you’re going if you don’t know how you’re going to get there? Writing one forces you to think through the countless issues needed to build a successful business. You’d be surprised at how seemingly mundane issues become quite complex once you’re forced to connect all the dots by putting your plans in writing. Missteps (big and small) can be avoided through proper planning. In fact, poor planning, or the lack of planning, is one of the primary reasons that businesses fail.
2. I’ll Deal With The Challenges As They Come.
Before your business launches you’re in “strategic” mode, spending your time thinking and planning. Once you launch, though, you automatically convert to “firefighter” mode. Suddenly, there’s little time to reflect and plan. Gone are the days when the priorities are set by you; rather, the priorities are being set for you by the day-to-day crises that crop up as you run your business. Your job becomes one of putting out fires, so you no longer have the luxury of thinking about the big picture—you’re just trying to survive!
3. A Business Plan Won’t Help Me After Start-Up.
Your business plan’s useful life doesn’t end once you launch your business. Re-read your business plan annually and answer the following questions so that you can stay on course—or change course—as needed:
- By reacting to your company’s day-to-day challenges, have you veered off course? In other words, have you chosen the direction of your business or has the business chosen it for you?
- Even if you have increasing revenues, are you pursuing the most profitable line(s) of business? Are 80% of your resources being spent on 20% of your revenues? If so, how can you refocus?
- Are there opportunities you’ve missed that might be worth pursuing? new directions worth exploring?
The value of a business plan is not only the plan itself, but the process of writing it. It’s your golden opportunity to look at the big picture, strategize and, most importantly, think proactively rather than only reactively. It’s also the ideal time to work through nitty-gritty details, test ideas and think outside the box. This process—and it is a process (no shortcuts)—helps you avoid mistakes before they happen. And writing a business plan transforms you into the final authority on your business; you’ll understand it from top to bottom, inside and out.