Ask Dave Taylor: Tech and Business


Why is it important that I write a business plan?

I don't know whether you remember me but I emailed you regarding your website and you gave me permission to reference your work. It is coming along well. I was wondering if you had any statistics on relative success comparing people who created business plans with those who hadn't created plans for their business. I'm just trying to find out how much it helps. By the way I am currently writing my business plan and your site has helped me immensely!

If there's one area of creating a business that I have found entrepreneurs consistently don't get, it's writing a business plan. I even know of entrepreneurs who hire someone else to write the plan, as if it's the final document that's important, not the process (I have written about the problems with that approach extensively too, including at Why successful startups never outsource their business plan).

Not to sound too new-age or anything, but it's the process of forming the business plan that's important, not the final document itself. Sure you want to have a good plan when you're done, one that reflects all your great ideas for your business, savvy analysis of your competitors, accurate and believable financial projections, good executive and founder bios, and so on. But even a mediocre business plan is a ton better than no business plan.

There are a couple of reasons for this, in my opinion. First...