I wanted to continue the discussion from my last post about the One Page Business Plan, because I often get questions about whether business plans are even necessary.

There’s a meme running through the business world that many great companies have been started without a written business plan.  In fact, I talked with Brian Schwartz (of 50 Interviews fame) and it’s pretty clear that many businesses started without one.  Many great, successful businesses.

So clearly the answer is that a written business plan is NOT required.  But that’s not the whole answer.

It’s all around that requirement for the business plan to be written.  I’m a big fan of writing things down, myself, but for some people that becomes a constraining factor.  If you think you’re in the business of selling coffee today, maybe it’s more difficult to just become a bakery tomorrow.

That stabilizing of the business can be great – up to a point.  If you’re flying your business into the ground just because you don’t want to change your plan from two years ago, that’s not a good thing.  If you’re changing your business and confusing the heck out of your customers, that’s also not so good.

I’ll also admit that some people are able to succeed without writing the business plan down.  Here’s how I test it:  If someone can talk about all parts of their business for a couple of hours, they’ve thought it through.  And if I can talk to them a couple weeks later and it’s 98% the same, then they have a business plan in their head.

But, honestly, I think many people resist writing it down because they’re scared about what they’ll find out.  They’ll discover that there’s an important part of the business that doesn’t work, or something they have a blind spot around.  But wouldn’t you rather find that out in the planning stages, rather than six months later when you’re frantic about your finances not working?

Should you go write the 30 page business plan before you ever get started?  If it helps you do the thinking.  But it’s the broad and deep thinking that’s important; the written form is only needed when you need to justify it to a venture capitalist or partner.  And, of course, the 30 page business plan kind of assumes that you have enough foresight that you can predict that level of detail far in advance.  That’s rarely the case.

Here’s my bottom line:  Short, concise business plans are a good thing for startups.  They help you through the thinking process, and to be able to stabilize and focus your efforts.  Without that, you’re more likely to burn through a ton of cash as you wander around looking for a way to make money.

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