A client of mine recently asked my opinion concerning one of his own clients, a medium-sized business struggling with shrinking revenues. When I asked what they were doing to turn the situation around, he explained:
"Well, two years ago they hired a management consultant to help them write a 90-page business plan. Last year they updated that plan. Last month they wrote a 'rescue plan' to get their original back on track."
The moment I heard "90-page business plan," I knew what was wrong. His client, like so many people, had bought into the conventional wisdom that "failing to plan is planning to fail."
While planning is useful--indeed essential--at a project level, detailed business plans are, IMHO, worse than useless. Before wasting your time writing (or rewriting) one, consider these points:
1. Investors don't want to see one.
As I pointed out in "The Secret to a Great Business Plan: Don't Write One," investors are not interested in business plans beyond a few PowerPoint slides setting out the basic idea and the general direction. In fact, savvy investors consider a detailed, formal business plan to be evidence of inexperience, poor prioritization skills, and even rank incompetence.
2. Writing one takes time and money.
If, despite that, you're still going to write a business, you presumably want one that's readable, understandable and actionable. Writing that level of business document (as opposed to slapping down whatever comes to mind) can be time-consuming, even for a professional writer. If you're just a normal entrepreneur, you could end spending many hours crafting a business plan--time that could be better spent building your company.
3. You'll need to pivot anyway.
Startups and early-stage companies almost always change direction as the team learns more about what's possible and what customers want. The moment that you execute a pivot, your business plan becomes useless at best and an impediment at worst. Just as important, an effective pivot requires management attention that would be wasted updating your business plan.
4. Planning can be an excuse for inaction.
As illustrated by the example that started this post, planning provides the illusion of getting something done without the hard work of actually doing something. You get to enjoy the fantasy of success in your imagination without the effort required to achieve that success in the real world. This is not to say that you don't need some idea of what you're doing and in what order, but planning just to plan is wasted effort.
5. It can limit your thinking.
Even the best business plan can only reflect your best perspective and understanding of the situation at the time you wrote it. Since there's no education like experience, once you've arrived at "now" the ideas you had "then" are usually naïve and half-baked. Unfortunately, by the time you've gotten to "now," the ideas you had "then" have continuously constrained and framed how you're perceiving the "now." Your business plan can thus blind you to new opportunities.