Entrepreneurial Myth or Real Talk: Are Business Plans Necessary?

According to the Wall Street Journal, “A good business plan can help you figure out how much capital you need to launch your business, how much revenue, profit and cash flow your business is likely to generate in the future.”

If you don’t have a track record, you’ll need to tell your story in a language that investors can understand. Remember an investor who’s serious about putting money in your company will want to see you’ve done your homework. Figuring out things along the way can be a recipe for disaster if you haven’t planned properly how to use your working capital.

A formal business plan isn’t critical to the survival of home-based businesses without employees, massive inventories or overhead and minimal capital. You can pretty much dive into the market without one.

But established entrepreneurs caution, if you’re launching a startup that requires funding and staff to help you build it, you may be skating on thin ice if you forge ahead without one. Going into business is often described as going to war. Wouldn’t you need a battle plan?

If you decide on going with a business plan, it should be short and used to illustrate what direction your business is headed and the people involved. It ‘s still up to you to go out and get the data. Remember it doesn’t already exist.

Johnson says, “Instead of rushing the document, take the preliminary steps before you begin writing. These steps make your plan stronger and improve your chances of success and funding.”