There is no requirement that you have to write a business plan. Currently, there’s no state or city that requires it when you apply for a business license. Matter of fact, writing a business plan is a pretty outdated mandate from a lot of college professors.
Entrepreneur: “I want to start a business. What should I do?”
College: “Have you written a business plan?”
College: “Why not?”
Entrepreneur: “I have this really good idea. A lot of people told me to start a business, but suggested I should talk to someone or go to school.”
College: “Well, you need to start with a business plan.”
I won’t say that’s a typical conversation with a new inspired business owner, but I know it on a firsthand basis. Not to pick on college institutions either. This conversation could be with anyone. The default answer to this question is a business plan.
All business schools and colleges teach this principle as a key component of every great successful company. There’s a lot of information out there that you can find how to write a business plan from a 30-to-300 page document.
Do I Need a Business Plan?
The true question is, “why do I need a business plan before I start selling my product or service?” The answer is you don’t.
Truth be told, you don’t need a business plan to have your business license. If you have a great idea, all you need is a solution that meets the consumer’s demand. Once you supply that need, your product/service has the opportunity to compete in the free market.
When starting a business, all you need to do is pay the fees while submitting the right legal documentation according to your business structure. It’s that simple. What’s not simple is knowing how to do it correctly.
Everyone may keep saying write a business plan, so why not? Even though you don’t need it, your vision will be clarified as you unfold the details of “how” it becomes into reality.
But don’t get cocky or comfortable now that you don’t have to write it. There will be a few times you absolutely need a business plan.
Anytime you and/or your business requests funding from the SBA (aka, small business administration) or microlender, you’re going to need to fill out details that could be found in a business plan. Depending on the amount, they may require a full business plan submission.
UW Business Plan Competition
This week, I had the opportunity to go to the Business Plan Competition at the University of Washington with my Clark Entrepreneur Club students and it was amazing. I observed a lot of students who were entrepreneurial teams straight up serious, currently grinding, and committed to the business.
Almost all the groups I spoke with had sales. I was super impressed with the Seattle Strong Cold Brew company with significant customers, such as Facebook, Expedia, Google and New Seasons. As you see in the image, their table was packed–since I wasn’t a judge, I didn’t want to monopolize their time to pitch to potential investors–and they were the first company I got the chance to speak with in regards to their journey.
All I can say is, “wow!” Their story was just as good as their cold brew. I might have to be a customer if they come more down south. Watch out Starbucks, lol!
In order to participate in this round, teams have already needed to complete a 5-7 page executive summary. The 36 competitors weren’t all UW Students. I saw groups from Washington State University and the University of Oregon. One business was taking on something unique and different targeting the gamer market.
Since most brands have apparel, big gaming companies don’t have a unifying line of apparel. Well, SCLOBO wants to change that with a streetwear brand created by gamers for everyone. Their pitch included unique apparel with gamer cards, but I’m not a gamer so it wouldn’t be an interest for me. However, they did advance to the next round.
As I said earlier, you don’t need to write a business plan but you should because you never know the opportunities.
It’s Your Choice
The reason why you would want to write a business plan is that it gives clarity to both you and your supporters. For all of those details of how you envisioned it, you writing it breathes the life of reality into the idea. The document creates legitimacy with potential supporters.
Your idea has legs. You’re not seen as a dreamer but as a doer.
I write this because my business is personal because this service is for the advancement of all humanity. My failures and successes are for your gain. No strings attached.
Nathan A. Webster, MBA
Consulting | Marketing | Web Design