It’s Fashionable to Skip the Business Plan — How Reckless Is That?
It all started with a business plan.
In 1994, Jeff Bezos famously sat in the passenger seat during a cross-country roadtrip and banged out the business plan for Amazon. Yet, you might be surprised to learn that Bezos is an outlier among entrepreneurs. A lot of them actually just make everything up on the fly.
A range of studies have indicated that only one-third of entrepreneurs follow a business plan, and found no difference in performance between those who did and those who didn’t. So, are business plans still relevant? Here are some thoughts from business leaders who responded to our survey.
Most respondents defended the business plan
As it turns out, many business leaders are still passionate advocates for the value of a detailed plan. “I think that questioning the essence of a business plan is nonsense,” says Josephine Li, founder and CEO at Cicinia.
In many cases, investors and venture capital firms will want to see a strategy for how their money will be spent. Stella Cooper, CEO at PaydayLoansUK, emphasizes this point.
“Without a business plan, a prospective investor might think of you as a directionless business owner, which won’t work in your favor,” Cooper says.
The middle path: a flexible business plan
Even back in the day, many entrepreneurs didn’t write a formal business plan. A 1989 survey in Inc. magazine found that just 21% of businesses began from a detailed plan. Another 58% did follow an outline, but they kept it fast and loose.
Many business owners in our survey hold similar views today. Adam Olson, the co-founder of Home Service Direct, thinks that formal business plans are too rigid. “Businesses require flexibility, as there’s no assurance that everything will go as planned,” he says.
Just wing it?
Some of today’s biggest companies, especially in tech, started as college passion projects without any market research — just intuition. In 2018, Syracuse University professor Carl Schramm even published a book titled Burn the Business Plan: What Great Entrepreneurs Really Do.
As we can see, there is no straightforward answer. You can succeed with or without a business plan. However, doing some sort of planning is clearly helpful for most businesspeople, even if it’s just a basic outline. Whatever you choose, just make sure you get out there and do it!