I am reading plenty of articles about how it is not necessary to have a business plan and creating one is a waste of time. So, you may be asking, do I need to invest the time to develop a business plan? I believe the answer is yes. But make sure you are using it more as an exercise in thinking through your business than some kind of in-stone work of art that will flawlessly guide you for the next five years. It is a tool to help understand your business from various angles.
I often joke business plans are good for about 20 minutes and then become outdated. But the exercise in thinking through your target market, your product offering, the value proposition, the competitive landscape, your distribution strategy, your financials and your team goes well beyond 20 minutes. In fact, I think it is a necessary step for your startup or small business.
A business plan is not limited to just a startup. When I was at AT&T Knowledge Ventures, we wrote business plans for each intellectual property asset(s) we planned to commercialize. At the time I thought it was overkill, but I soon learned the exercise forced you to scenario plan as well as address very difficult questions which helped with strategy and risk mitigation. Those five years taught me the value of writing a business plan - special thanks to Courtney Lambert, Mark Roche and Abha Divine on insisting we create a plan prior to commercialization.
From my experience, there are two main reasons I think business plans are a good idea and a necessary step in the startup lifecycle process.
1) It helps strengthen your pitch deck as you have gone deep enough in thinking through your business from various angles to provide solid substance for credibility. It also helps for the presentation as well. You will be asked tough questions and doing your homework via a business plan may help you answer those tough ones with more than a generic surface level comment.
2) It can help you formulate a more successful strategy. When you really research the market, the competition, the technology etc. - you begin to see patterns that may be exploited by your startup that you didn't see before. You can scenario plan as well which helps address the inevitable impact from your competition.
I do understand why some folks think business plans are a waste of time. I'm not one of those people. I think anything that can help your business succeed should be on the table. Good luck!