It’s not just entrepreneurs who have come to the realization that exhaustive business plans may be overrated. Venture capitalists, angel investors and bankers are also in favor of stripping down such documents. Many say they simply have no time to read a 100-page plan, even if they were so inclined, and that there is little value after the first few pages.
The modern business plan is a dramatically distilled version of those from five or ten years ago. The best ones today address market opportunities and how the venture will pursue them, in a few well-written paragraphs. That’s it.
It’s not that people shouldn’t incorporate planning into the process of starting or growing a business, it’s that the process and final output has changed. No entrepreneur should spend 6-8 months writing 100+ page business plans. Instead, they should write down some notes to define the following:
1. The problem they are solving
2. Their solution to the problem
3. Who the target customer is and the size of the addressable market
4. Current competition or alternative solutions to the problem
5. Estimated costs and revenue
6. Key partners & resources needed to run the business
7. Sales channels and planned marketing activities
This first pass at a plan should be no more than 1-2 pages. Entrepreneurs should then set out to validate their assumptions: Do potential customers really have the problem the entrepreneur thinks they have? Do potential customers think the solution is a good idea? Are they willing to pay? Etc.
Based on this early customer feedback, the plan can be revised and expanded. It’s much more of a “plan as you go” approach where the entrepreneur keeps the plan alive and is constantly refining it as they learn more about their customers and their business.
Those longer plans, that used to be the standard, may signal hesitancy or doubt about a concept’s viability. A shorter plan, on the other hand, signals a bias toward action and away from planning. This is not to say that planning is unimportant, but a lot of people get stuck in the paralysis of planning and never actually do anything.
