At Neon Roots, we work with a lot of entrepreneurs at every stage of the entrepreneurial process. Some only have a vague idea for a startup, and we give them the methodology to make it a reality. Some have a detailed plan and only need help with execution. Regardless of their current stage, though, eventually they have to ask the all-important question: when do I write a business plan?
Does It Matter?
Before asking when you should write a business plan, it's important to question whether it's really necessary in the first place. While conventional business wisdom holds that a business plan is a critical first step to starting a venture - with the conventional model being research, plan, then execute – a growing number of modern thinkers aren't so sure. At NR, we can certainly understand the skepticism.
In many ways, a thorough, well-researched business plan violates both Agile and lean startup principles, both of which we're huge fans of. If you're launching a startup, your business will probably pivot two, three, or more times before you even think about expanding it or finding capital, and if you don't pivot, chances are you're missing something crucial. So if your entire business may pull a 180º within the first 6 months of starting it, is a business plan even that important?
Proof in the Process
For our money, the answer is yes - but it's only important for you. Writing a business plan isn't valuable so you can show your customers, investors, or even employees, but rather to ensure that you've done your research. Even if you bury it in the ground, writing a business plan forces you to do the research on your customers, market, and competition, ensuring that you know every aspect of your business from the inside out. This is crucial down the line when you're pitching investors, onboarding your first employees, or trying to out-think your competition. A business plan isn't a marketing tool or an investor deck - but it's an exercise in research, and it'll inform every decision you make for your business moving forward.
Write It Late
So ultimately, you probably will want to write a business plan – but it certainly shouldn't be the first thing on your agenda. If you're following lean startup principles, you'll likely pivot in significant ways in the early stages of your venture, and you don't necessarily need a new business plan each time you do. We'd recommend delaying your business plan until you feel you've found a high-potential product, customer, and monetization model. Once the major variables of your business are established and generating revenue, it's time to dig in and write the plan - then use the knowledge you gain from it to secure whatever resources you need and grow.
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