“Are you starting a business? Show me your business plan!” All entrepreneurs have heard this phrase. A simple query on the internet with business plan returns millions of results. Writing a business plan seems to be a necessary step on an entrepreneurial journey. In fact, only one in two entrepreneurs writes a business plan.
While the Internet is full of information on how to write a business plan, which sections to include, etc., there is little advice on why: “Why make a plan?”, “What type of plan to write?” and “What can we expect from a business plan?” … After following more than 600 start-ups from all industries for three years, Christophe Garonne delivers his results and makes recommendations. For Les Echos Entrepreneurs, he revolves around the ideas received on the business plan.
# 1 Making a business plan is an important success factor
No, a business plan is not mandatory for success. If writing a business plan allows the startup to get to know itself better and make itself better known to its potential partners, a plan in no way guarantees success and the absence of a plan does not lead to success.
# 2 It is necessary to make a business plan to attract investors
Yes and no. A business plan is requested when submitting a funding application by the vast majority of institutions. It allows investors to get a first idea of the project before meeting the entrepreneurs. On the other hand, it is a necessary but not sufficient condition for fundraising. Several studies have shown that investors respond intuitively rather than rationally in the early stages of financing a start-up.
# 3 The length of the business plan is a strong point
Not necessarily. There are as many plans as there are entrepreneurs. In turn, the formalization of the plan is an important element of a startup’s success. The results are very clear at this point. Startups with informal, hastily written plans on a piece of paper are least likely to succeed. To put it another way, it is better to take the time necessary to write a quality, well-thought-out plan that sticks to the issues surrounding the startup and its surroundings.
# 4 The first goal of a business plan is to obtain financing
Contrary to many people’s beliefs, it is out of all the entrepreneurs in the creation phase that only a minority write a business plan to attract funding. The first goal of writing a plan is to be able to put your ideas together and identify potential solutions to the obstacles that lie ahead. The second goal is to create an action plan that will put an end to the development of the startup and mobilize the team members with clear goals to achieve. The third goal is to be able to effectively communicate the key elements of the project internally – to unite a team – and externally – to attract potential partners.
Thus, getting your business plan written by an external service provider is not necessarily a good thing because it does not allow you to take into account your entrepreneurial project and ask yourself the right questions. The planning process is at least as important as executing the plan itself.
# 5 Writing a business plan is useless: barely written, it is already obsolete
This is a comment that often comes up among entrepreneurs, and rightly so. We live in a world where economic conditions are changing very rapidly. Getting started writing a business plan should be seen as a dynamic practice that does not stop once the plan is complete. To reap the full benefits of their business plan, entrepreneurs need to review it regularly. This revision of the plan is a very important key success factor for entrepreneurs who decide to plan.
To summarize : if you decide to plan, take the time to make a successful plan, review it regularly, and above all do not forget that no business plan, no matter how detailed, will replace on-site action, a key element in the success of a business, big or small.
(1) Christophe Garonne & Per Davidsson, “An exploration of the phenomenon of business planning in budding and young companies” in Models for start-ups’ thinking and action, progress in entrepreneurship, business growth and growth, Flight. 18. A. Corbett & J. Katz Editors, Emerald, 2016.