Can You Start a Small Business Without a Formal Business Plan?
I'll be the first to admit, I've promoted the idea that for a small business to succeed, it needs a formal business plan. However, after considering the issue I'm having second thoughts on small business plans and I'm not convince that every small business needs a formal business plan.
Because typical formal business plans that can run from 50 to 100 pages of materials and sometimes even more - and can take months to prepare - not including time spent learning how to put one together - it would seem that if you don't need one that you should consider getting your business started without preparing one.
Does Having a Formal Business Plan Ensure Success?
A study completed by Babson College would suggest that at least for those who are not seeking outside funding, having a formal business plan before starting a small business or not having one at all really made no difference in the ultimate success of the business.
Keep in mind that the business plan industry is huge and this wasn't welcome news to them. But you really have to wonder if you wouldn't be better off taking the time needed to create a formal small business plan and using it instead to get your business up and running. Many home business don't require outside funding at start up anyway, especially those who plan to start their home business part-time while looking after the kids or while holding on to their full-time job. For those people, a business plan might be the last thing they really want to do.
How Creating a Business Plan Can Stifle Your Business
I think most would agree that one advantage enjoyed by business startups is the power of the "entrepreneurial spirit" - the ability to act quickly and take advantage of special opportunities. To be "market movers" if you will, and not "market followers".
Established businesses may have so much corporate bureaucracy or standard procedures to follow that they cannot act quickly enough to seize an opportunity before their competitors corner the market. Taking month after month to prepare a business plan can mean opportunities lost for some who want to start a small business - especially a home business. What happens instead is that you can get entrenched in "analysis paralysis" while you're writing your business plan with the end result that you never actually start the business.