So much has changed about doing business since the more traditional days of entrepreneurship, while other practices have retained their footholds over the years. For instance, as you work toward launching your own company you may ask: Are business plans obsolete? Is it a necessary step to prepare this lengthy document — or could your time and energy better be applied elsewhere?
Keep reading to explore more about the role of the business plan today, as well as some tips for effectively creating one of your own.
How Business Plans Are Changing
The rule of thumb for a business plan used to be to prepare a hefty document — sometimes up to 50 pages — outlining every conceivable facet of your business. While this could certainly be a thorough and informative way to explain the inner workings of your company, it had a few shortcomings. These included:
- Updating a long, dense document regularly requires a greater investment of time and exertion.
- Potential investors and partners are usually very busy; they may be deterred from perusing such a drawn-out plan.
- Traditional business plans have a tougher time navigating quick changes in the business landscape, such as the effects of the COVID-19 pandemic on customer behavior, demand, supply chain operations, and order fulfillment.
Does this mean the business plan is obsolete altogether? Not by any means. But many experts do advise entrepreneurs to modernize their approach to creating a business plan — one flexible enough to excel in today’s quick-paced landscape.
Writing a Lean, Modern Business Plan
The most straightforward answer to, “What is a business plan?” is a written account of what your business aims to achieve, where it is now, and how it will grow and reach its goals. This document has typically contained sections like:
- Executive summary: No more than a few pages summing up everything contained within the business plan, allowing someone to get a feel for a company at a glance.
- Business description: A general synopsis of your company’s history, structure, and type.
- Business operations: A more granular look into how your company will run.
- Market breakdown: A data-driven look at the market in which your company will operate and its target customers.
- Competitor breakdown: A data-driven examination of companies operating in the same space as yours and your unique selling proposition.
- Marketing plan: How you will reach your target audience.
- Past, present, and future finances: A data-driven look at the trajectory of your company, realistic projections, expenses, and assets.
- Appendices: Paperwork that supports your other sections but would be clunky inserted into the body of the document.
The general ethos behind a modernized business plan is to cover much of this same material but in a sleeker way that’s more optimized for disruption.
The U.S. Small Business Administration suggests creating something that falls between just a one-page summary and a full-blown business plan, emphasizing four main areas:
- A description of your business model
- Financial standing plus three years of projections
- Market, competitor, and customer info
- Information about yourself and your employees
It’s most important to prioritize what people are going to want to know right away. Keeping it concise makes it easier to make frequent changes to your business plan, ensuring you’re able to provide an up-to-date plan on a short turnaround. Not sure where to start? So-called lean business planning templates can give you a feel for how to streamline your blueprint without losing track of key information along the way.
Final verdict? Business plans are not obsolete, but they do benefit from taking a more efficient form in today’s world.