Alan Donegan tells you what you need to know about Business Plans and whether you even need one.
Note: This transcription has been generated with AI and there may be errors present.
So one of the questions we always get asked at the proper business school is, should I write a business plan? Or what’s the purpose of a business plan? Or I’ve been told by the professionals, the bank managers, the accountants that I need to write a business plan for my business before I start trading and getting going. And that’s what I wanted to look at today is, what is the purpose of a business plan? And why should you write one. So the main purpose for a business plan is to get funding for your business. So what you need to do in the traditional scenario of starting a business is write a business plan. Take that business plan to a bank or a funder and show them what you’re going to do. They then look at that and judge your business and decide whether they want to loan you money. What that presupposes is you need to borrow money to start your business. And as you’re all aware, on the proper business school, you don’t need money to start a business, you can do it for free, pretty much any business, whether it’s a restaurant, whether it’s a retail shop, whether it’s a website, you can do it for free. So actually, if you’re starting your business without borrowing money, you don’t necessarily need a business plan. So the traditional purpose for writing a business plan has become defunct over recent years, there is a slight difference between a business plan and a proposal. A business plan is the purpose of that is to raise finance, or raise funding for your business proposal, which you might have to do to write that to get through the door of opportunity in front of you with a customer that wants to buy your service is a plan that details what you’re going to do for the customer. But it’s slightly different. It is to land business. So a proposal and writing down what you’re going to do for a customer is extremely important and extremely valuable, you do need to plan that you do need to put that down and give that to the customer. But that is very different to a business plan, which is a formal document that you need to supply to elsewhere. The proposal is critical. And one last tip on a proposal. If you have just one option in your proposal, the only two possible answers are yes or no. If you have three options in your proposal, here’s an option number one, two, and three, the possible answers are yes or no for each of them. Or the customer might say I really like option one with a bit of option two. And actually, they might go for option three. So whenever you’re writing a proposal, make sure you put three options in there, not just here’s my plan, yes or no. Quite often what people do is they spend a lot of time Googling, researching, getting information about the business, which is all very valuable to learn what to do. However, what have I have found is that when you actually go and see a customer, when you go and talk to a real life customer, a real flesh and blood customer, everything changes. They tell you what they’re really looking for, they’ll tell you whether they want your service or not. If you actually go out there and try and get a sale, you’ll learn so much more than you would in 20 hours of googling stuff. So actually for us, before you write a business plan, we’re actually you may not ever need a business plan. Before you do any of that stuff. Go and talk to real life customers who might actually want to buy your service. So for us at the pop up business school, the first step to start a business. It’s not writing a business plan. It’s going to see real life customers. So that is our advice to you is ditch all the paperwork, ditch all the other stuff, go and talk to real people about what they really want to buy.