{"id":547,"date":"2013-07-02T10:55:33","date_gmt":"2013-07-02T17:55:33","guid":{"rendered":"http:\/\/www.gordonbenzie.com\/blog\/?p=547"},"modified":"2013-07-01T16:33:14","modified_gmt":"2013-07-01T23:33:14","slug":"when-is-the-right-time-for-a-business-plan","status":"publish","type":"post","link":"https:\/\/www.gordonbenzie.com\/blog\/when-is-the-right-time-for-a-business-plan\/","title":{"rendered":"When is the Right Time for a Business Plan?"},"content":{"rendered":"

\"Choosing<\/a>One of the questions I hear frequently is that of timing \u2026 when is the right time to devote the time and effort to prepare a more formal business plan? It is an important question, and one that must be considered carefully. If you write too soon, your idea may be completely different than what you ultimately go to market with. If you wait too late, much of the benefits will be foregone. How far along in lifecycle in your future business does it make most sense to more formally document your vision?<\/p>\n

To start, there is no one \u201cright\u201d answer. Some will argue that there is no point in writing a plan at all, at least in the beginning, as so many factors are subject change. I am reading an interesting book right now by Clayton Christensen titled \u201cHow Will You Measure Your Life<\/a>?\u201d In it, the author talks about the need for two business strategies \u2013 a deliberate and an emergent one. I found this analogy quite good. In order to begin a new venture (or adventure), it is necessary to have an initial direction to follow. The author coins this initial decision as being a \u201cdeliberate\u201d strategy. He gives the example of Honda entering the U.S. market with a large bike that will directly compete against Harley Davidson\u2019s products. Soon, however, it became apparent that this strategy wasn\u2019t working, as evidenced by a lack of sales. Meanwhile, a group of employees began using Honda\u2019s smaller bikes off-road, and were having a great time doing so. This \u201cunplanned\u201d activity and market segment became an \u201cemergent\u201d strategy, which ultimately gave Honda a foothold into the lucrative US market for motorcycles.<\/p>\n

Using this author\u2019s methodology, a formerly written business plan can be a great tool to validate an initial or deliberate strategy. This effort can give you a way to rationally defend your initial decision to pursue a new product or market expansion. As part of this process, you will either gain a greater comfort level with what you are doing, or not. Regardless, valuable conclusions will result (do I \u201cstay\u201d or do I \u201cgo\u201d?)<\/p>\n

An emergent strategy, however, might be best viewed as opportunistic, and one that might need further validation prior to making the investment in preparing a full, formal business plan. This approach then lets you be open to new \u201cemergent\u201d opportunities while at the same time realizing that you did pick your deliberate strategy for a reason \u2013 you need to give it a fair review and effort to validate that it either works, or that it doesn\u2019t. Writing a business plan on the initial deliberate strategy is a great approach to help validate if this initial idea is indeed worthy of the effort.<\/p>\n

Christensen states that about 93% of all startups change their strategic direction at least once before getting it right. So, flexibility and preservation of initial capital are clearly critical for survival. But, an initial direction is still needed before you can begin engagement in your idea.<\/p>\n

Two Reasons to Write a Business Plan<\/b><\/p>\n

The role of writing a business plan is really two-fold. The first is to better clarify the strategic direction you want to purse with your business endeavor. If, for nothing else, the act of writing down your objectives, strategic direction and competitive differentiation forces you to really think about these critical thoughts. You can\u2019t go to market unless you are really comfortable in telling your story. Writing it down in a business plan forces you to review all the points, including those you might be inclined to gloss over for lack of interest.<\/p>\n

The second role of writing a business plan is to get funding. An outside bank, business partner or venture capitalist will want to have some sort of documentation explaining in detail what it is you plan to accomplish. After all, it is their money that you will be investing. At this point, a more formal business plan starts to make sense. Note that while an angel investor might prefer to hear your \u201celevator pitch\u201d and in a few minutes, and then decide whether or not they will fund you, it still is very helpful if you have gone through the exercise of more formally reviewing your target market, competition, product positioning and pricing strategy to better understand how to turn a profit.<\/p>\n

Alternatively, if by flushing through your new business idea in greater detail, you discover that there is an inherent flaw in your plan, it is better to have found out earlier versus investing considerable effort, resources and money into an idea that really couldn\u2019t work.<\/p>\n

The Right Time<\/b><\/p>\n

Getting back to the question of timing, as you come up with an initial idea for a new business or product line extension, it probably doesn\u2019t make sense to prepare a business plan. First, you need to do some \u201cgut\u201d checks to see what sort of viability your idea might have. That review process might include talking to industry experts, potential business partners, friends and family. If your business involves the manufacturing of a new product, then it might also make sense to get an idea of what costs are involved and what possible patents might be required in order to avoid potential infringement issues.<\/p>\n

Once your initial review is accomplished and you feel comfortable your idea definitely has merit, now is probably a good time to consider writing a plan that captures the salient competitive and marketing requirements to get your idea off the ground. Through that process, you will soon realize whether or not your idea could work, at which time it is highly likely you will need to consider the use of outside funding. As your plan will be virtually complete by that time, having the plan already written will let you continue forward without delay.<\/p>\n

 <\/p>\n

Gordon Benzie<\/i><\/strong>\u00a0is a marketing communications professional and business plan adviser that specializes in preparing and executing upon business plans and marketing strategies. Gordon can be found\u00a0on\u00a0<\/em><\/i>Google+<\/i><\/a>.\u00a0<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

One of the questions I hear frequently is that of timing \u2026 when is the right time to devote the time and effort to prepare a more formal business plan? It is an important question, and one that must be considered carefully. 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