Short answer: No.
You can stop reading this article now and get back to work building your business. Doing anything else (especially like stopping to create a business plan) is purely wasting your time.
In all seriousness though, why is the question of a business plan still so prevalent amongst founders? Why is it that startup founders feel like they need to spend days or weeks working on the “perfect” business plan?
When was the last time ANYTHING ever went according to plan?
Airbnb was air mattresses and a free breakfast.
Uber was a poor man’s taxi service.
Slack was a video game – if you can believe it…
As founders, investors and startup folks, we all know tuly innovative companies start as one thing and very often “pivot” multiple times throughout their life. Especially in the early days when they literally have to – it is all about survival of the fittest. The product changes, the target market changes, the business model and pricing change… Everything changes.
That is the only constant.
And regardless how far along you are in the process of building a great company, you’re always only one hard pivot away from something entirely different.
Remember that you don’t really know what you’re doing.
Remember not to take yourself (or your business) all that seriously.
Because you’re still learning to walk, even though you’re trying to run.
That said, I know what you are thinking: what if an investor asks to see your business plan?
As an early stage/pre seed company struggling to find product-market fit and see if there’s a real need for your product or service, does it really make sense to waste three-to-five pages outlining your “theoretical” business plan? No. Of course not.
But don’t worry, you’re not going to miss out on investors. Any investor that won’t settle for a well-made pitch deck isn’t worth your time – they’re too outdated and old-fashioned to be of any help and will probably be a hindrance to your progress as develop the business, build traction and seek follow-on funding down the road.
So are business plans useless?
No, not at all. To the contrary, business planning is the hallmark of a mature, healthy business – one with the potential (and the foresight!) to succeed now and into the future. Think of in terms of aligning your ambitious milestones with actionable strategies and realistic projections of the results. Like planning your meals for the next week before grocery shopping for ingredients.
Because failing to plan is planning to fail.
This is something many founders struggle with – at least if you’re a full steam ahead sprinter like me. With so much to do in your “fight for survival,” you’re inevitably endlessly busy, racing to “build the airplane before you hit the ground” as Reid Hoffman likes to say. You’re so concentrated on the here and now, you’re oblivious to the major pitfalls ahead of you and barely able to focus on steering. At least this was the case with me, as well as with many founders I’ve worked with in the past.
(Need help with this? It’s much easier for me as a coach to bring in that outside perspective 🙂
I built my business like there was no tomorrow (because there wasn’t, at least not if I didn’t succeed). That led to problems, major problems (more on why my greatest success was also my greatest failure here). Which were only amplified by the fact that it was an ecommerce company, meaning physical products, long lead times and major capital requirements.
Which is problematic when you’re go full steam ahead and failing to plan for the future.
Because products need to be restocked.
Because orders took months to reach my warehouses.
Because budgeting, bookkeeping and accounting weren’t exactly a strong suit.
All of which held back my company from reaching its true potential. (For more on my business and the failures that led to it being not only my greatest success, but also my biggest failure, see this post).
Evolving beyond day-to-day business
As your business grows and develops, it will inevitably reach a paradoxical “pivot” point – a size and stage where things start straining its duct-taped-together seams. Suddenly, things won’t be quite so black and white. Not everything will be centered around survival, acquiring customers and the big picture things…
Instead, you’ll enter that awkward gray zone where the “trivial details” like actual net margins, operational efficiency and customer retention/LTV become at least as important as the “sexier” stats like user growth, total revenue and ad spend ROI.
Because your business isn’t in the do or die phase anymore. You’ve hit profitability (or close to it) and are entering the next stage of business development – the mature, growing company.
Said another way: you’re growing up and its time to put on your big boy/big girl pants.
Because it isn’t all fun and games anymore. Employees are counting on you, investors too. Suddenly (and gradually), things start to change because you’re no longer playing with nothing to lose.
Then at the latest, business plans need to come into play – otherwise you’re destined like Icarus to fly too close to the Sun and burn your wings. Which is why many startups (think Blue Apron, WeWork and other big name “failures”) come crashing back to Earth.
The dirty little secret is: what got you here won’t get you there. The “beast” is just too large and cumbersome to rapidly react and fight for every little scrap of revenue/growth.
It is time to start systematizing things. It’s time to build your battle plan.
What do you want your next 3, 5, 10… years to look like? What can your company (with all its strengths and weaknesses) realistically hope to achieve?
Are you aiming for an IPO or an acquisition? Perhaps building a standalone private company. Whatever it is, goals are just dreams until you put pen to paper.
How will you execute, how will you get there? That is the question you need to ask yourself and your business/battle plan should provide the answers.
And luckily for you as CEO of a now “stable and successful” startup company, you should be more than able to free up enough time for several intensive days/sessions with your management team to shore up the particulars of your business plan.
(If this is a challenge for you or if you’re struggling with freeing up your time and the unbelievable stress of being CEO, here’s a post that may help. Or, we could always just work together 🙂
Which is perfect, because investors should only really be concerning themselves with business plans after a company reaches Series B+, i.e., when the decision of whether or not to invest shifts from the upside and potential of the business and determinedness of the founder to the hard truths of metrics and multiples.
And even then, never forget:
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