Guest Post by: Tumi Frazier, founder of Tumi Frazier International
“Lose the business plan” says Allon Raiz, the founder of Raizcorp, an organization that nurtures entrepreneurs and grows profitable businesses. But the question is can a business really succeed without a formal business plan?
A professor and entrepreneurship researcher at Babson College, William Bygrave, spent several years researching if graduates who started businesses with formal business plans did better than those who didn’t. Bygrave discovered that entrepreneurs who began with formal business plans had no greater success than those who started without them. However, he established that writing a business plan increased the chances that the individual would actually go into business.
Essentially a business plan does not guarantee the success or better performance of a business.
Several start-ups have even pitched their ideas through presentations rather than actual business plans. The key is knowledge of what you are talking about and showing that you have thought through your business idea, as entrepreneurs rarely write their own business plans.
So, does this mean we have to dismiss planning completely?
You probably have heard the saying: “when you fail to plan, you plan to fail” – so, it is necessary to plan for your business. In fact, it is crucial to have a basic outline of your business to help you plan and know critical information about your services, products, markets, financial potential, tax and legal implications, including costs.
A business plan does not have to be 50 or 100 pages long with intricate graphs and business jargon as this can be a daunting exercise for many entrepreneurs; such business plans can actually stifle your business and your creativity, let alone the business agility.
Note, a business plan is a road map for your business that has to evolve over time; things change and therefore your business plan has to be versatile enough to change with the prevailing circumstances. So, you have to adapt and refine the plan in line with changes in the business environment, technology and customers’ changing needs.
It is also important to understand what stays the same in your business and what changes over time.
Remember, what you stand for – (core values) remain the same but how you do things - strategies, operating practices, structures and so forth changes over time.
While financiers often provide capital based solely on the business plan, there are certain aspects or attributes of an entrepreneur that the business plan does not capture, such as passion, tenacity, resilience, leadership, persuasion, traits that financiers may miss. These attributes are extremely important in the success of the business.
It is encouraging, however, to learn that there is a new approach emerging in the venture capital industry globally, where the person behind the business is taken into consideration, especially when the entrepreneur has a knowledge base, learnt from past mistakes and has developed self confidence that enables her to navigate through obstacles.
Tumi Frazier is a South African entrepreneur, professional speaker, author, TV personality, consultant, and founder of Tumi Frazier International, Tumi Leadership Academy, and Tumi Foundation. Tumi is an internationally acclaimed Leadership and Change Management expert who has worked with high profile clients and organizations across Africa, United States and Europe. Tumi has authored 4 books: Courageous Stories of Inspiration; In the Midst of the Storm; Stepping Stones to Success; and Your Moment. Follow Tumi Twitter | LinkedIn
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