For many years, almost no one would have started a new business without developing a detailed plan to guide the company’s launch and the first stages of development. Today, business thinking emphasizes flexibility to pivot when initial plans or assumptions about a new enterprise don’t work out. As a result, many entrepreneurs may question the necessity of creating a business plan when starting a new company. Do business plans still have relevance in today’s fast-paced, technology-driven world?
The Traditional Role of Business Plans
Traditionally, business plans served several purposes for new companies, including:
- Offering a roadmap or checklist of things entrepreneurs needed to do to launch the company and begin growing through the first stages of the business lifecycle
- Providing ready-made materials to pitch investors
- Establishing a new business’s strategic plan
Banks or investors rarely, if ever, invested money in or loaned money to entrepreneurs who did not have detailed business plans. Financiers saw business plans as a sign of an entrepreneur’s preparation and attention to detail. Business plans also allowed lenders or investors to conduct a risk assessment of a new business. Plans could also help business owners with budgeting and setting long-term goals.
The Changing Business Landscape
In recent decades, startups and small businesses have come to favor flexibility and agility over adhering to long-term plans. Today, business planning can take the form of methods such as the lean startup model, one-page business canvases, or SWOT maps. In the present business landscape, startups and emerging companies face rapidly changing markets, customer trends, and technology, which can quickly outdate comprehensive, long-term business plans when companies must pivot to respond to failed business models or to industry changes.
Arguments for Continuing to Use Business Plans
However, business plans may still have some continuing relevance in today’s market. Some of the ongoing benefits of traditional business plans include:
- Securing funding, as lenders or investors will expect to see some sort of detailed business plan to understand a new company’s strategy and to assess its risks
- Aligning business teams along the same objective
- Helping to clarify roles among co-founders
- Offering measurable milestones for success that keep teams accountable for their performance, rather than letting founders and employees meander without clear goals
Although a business may need to pivot in response to failed business models or changes in the market, pivoting does not have to mean jettisoning the business plan. Instead, business plans can become living documents that founders update regularly as the company’s needs and objectives change.
Modern Alternatives and Adaptions
Some of the modern evolutions of the traditional narrative-style business plan include:
- The Business Model Canvas – A one-page visual chart on which a business may describe its or its product’s value, infrastructure, and finances.
- The Lean Business Model – In the lean business model, startups focus on rapid iteration of products and services through continuous data-driven improvements. Startups use a “minimum viable product” to test hypotheses about a product or market segment.
- Pitch Decks – Many founders distill their business plans into PowerPoint presentations, which convey the details of a company’s business plan through bullet points and visual aids.
These alternatives to the traditional business plan reflect a preference for more flexible plans that allow companies to pivot without having to take their business plan back to the drawing board. Furthermore, companies today can leverage digital tools that enable data-driven decision-making, allowing business owners to adjust their business plans more quickly in response to substandard performance or changes in technology and the market.
Contact a Business Attorney Today
When you launch a new company, a business plan can serve as a roadmap to guide you through the initial stages. Contact Willcox, Buyck & Williams, P.A., today for a confidential consultation with an experienced business lawyer to help create a business plan that navigates the legal issues and challenges of starting a new enterprise.