Do You Need a Business Plan to Start a Business?
You have an idea for a business, but you can’t get started until you have a comprehensive business plan. Right?
🚫Wrong.
Don’t let building a telephone book-sized business plan with charts, graphs, and appendices stop you from starting!
That’s whack!!
But also, don’t go in completely blind.
🔥 HOT TAKE 🔥
You don’t need a comprehensive business plan to start building your small business or launch your entrepreneurial venture.
BUT, having a plan, even a simple one, can give you a head start when you do begin building out the foundations of your business.
And, if you’re a side hustler that found yourself in business or an accidental entrepreneur, it’s not too late to map out an informal strategic business plan, so you can grow and scale with purpose and confidence.
What’s the point of a business plan?
Okay, yes: we’re like ‘nah you don’t need that sh*t just to start your small biz!’
BUT, even a little tiny bit of planning can a long way when you’re starting out, in a few key ways:
Clarity: Figure out if it makes sense before you go all in. If you’ll be investing significant time and effort, don’t go off just a hunch.
Expectation setting: When you’re excited about your idea and in a honeymoon phase, everything feels shiny and doable. Make realistic estimates of the level of effort required to get your business up and running.
Peer around corners: Start this journey with your eyes wide open. Look out for potential hurdles to starting your business and how you’ll overcome them.
😎 PRO TIP Your biz will hit bumps. Don’t panic (trust us, we’ve tried and it doesn’t help). Try sketching out a few “what if’s” or worst-case-scenarios. Then, dream up solutions to avoid the faceplate. We outlined 7 common obstacles we faced as new business owners, and how we got past them.
🎧Listen to the episode and learn from our mistakes so you can skip over the messy parts.
When You Do Need a Formal Business Plan
Real talk, there are instances where a thorough business plan is required, like:
If you’re pitching investors or applying for a bank loan.
If you’re planning for rapid scaling with multiple employees.
If your business requires large startup capital, like brick-and-mortars, tech startups, a ploy to steal the moon.
Yes, even Gru needed a formal business plan!
If you’re going the scrappy small biz owner route (like us!) you’ll be fine with a basic road map, and the trademark ‘we’ll figure it out as we go’ entrepreneur attitude.
Misconceptions about business plans
Before you build a business plan (even a scrappy one) let’s cover some common business planning misconceptions:
Misconception #1: If I have a business plan, my business will be successful
🚫Wrong. If you have a business plan, you have a business plan. In the real world, some things work and some things don’t. Some things go according to plan, some plans go out the window. Chances of getting closer to your goals go way up when you have a plan (even an informal one), but there’s no guarantees in business.
Misconception #2: If I have a great business plan, I’ll be able to get funding to start my business
🤔Maybe. A pretty slide deck is not going to secure your small business funding, but a solid business case might. Here are a few things that will help you get start up money:
A clear, well-defined business model
Sound pricing strategies (that make you money)
Calculated Cost of Goods Sold (COGS) and strong business math.
👉 If you need some help calculating your business numbers, listen in as we demystify profits, costs, and revenues.Market demand that’s backed by real data and trends
Realistic growth projections based on data (not dreams)
Misconception #3: If I have a great business plan, I can follow it to a T, and nothing will ever change
🤡Hah. We can’t even follow the recipe for a boxed cake mix without a prob. Life is a wild ride, nothing goes according to plan, things change. Don’t get too attached.
The truth about business plans
A business plan won’t make you a millionaire (or will it? 🤔) but it could save you from a really expensive mistake.
What a business plan won’t do:
❌ Automatically unlock funding opportunities
❌ Guarantee your business will succeed
❌ Serve as a perfect step-by-step guide
❌ Replace actually launching and testing your ideas (over and over and over!)
It’s not a magic map. It’s a tool and a thought exercise to make sure you’re considering all angles of the business you want to build. And it’ll need to evolve constantly as you go.
What a business plan can do:
✅ Expose weak points and unclear ideas
✅ Help you refine your business model, and short- and long-term strategies
✅ Force you to think through pricing, margins, and market demand
✅ Give you early insight into whether your estimates are accurate-ish, or red flags. (Projections should generally point to profitability!)
This is your opportunity to pressure-test ideas on paper before you waste time and money in the real world (like launching a premium artisanal ice cube subscription service before realizing most people are just fine with the ice machine in their freezer).
4 Questions before you start your plan
Ask these 4 questions to decide how in-depth your business plan should be, and then we’ll talk through what to include in your plan.
What type of business do you want to build?
If you’re planning to spin up a side hustle or part-time gig with a goal to make a few hundred dollars each month, you can get by with minimal planning.
If you want to build a global company that rivals Google and Facebook, you’re probably going to need a capital investment. So, yes, you’ll also need a comprehensive and corporate-y business plan. (womp womp)
Most people land somewhere in between. The good news is that you can begin your entrepreneurial endeavors as a side hustle while you slowly shift out of your 9-5. Side-chick becomes main-chick kinda deal. 😉
2. Do you plan to hire employees?
A business plan can outline key details about staffing, employee management and business leadership.
If you’re planning to pay your staff (LOL, we hope so!) it’ll help you estimate projected payroll.
If you’re going to use contractors (think: free-lancers, outsourcing, offshoring, outside services) or you’ll be the sole employee of the business, you may be able to skip this step of the plan.
3. What are your estimated off-the-ground expenses?
Write up a rough estimate of the COGS, your desired profit margins and realistic revenue goals.
We love to dream big, and here at Big Bad, our reach goal right now is $50,000/mo revenue, but as you build your business, try to keep your feet on the ground. So, what keep it to what’s actually realistic in terms of earnings (for now!)
Map out your launch costs, and what it’ll take to keep things running for a while, and compare that to what you can reasonably earn. Cross-multiply, scribble, use sticky notes…just get clear on the math behind your business.
If you’re looking to secure serious small business funding dollars, you’ll need to flesh this out in detail.
If you’re doing this on your own or slow and steady, this step will help think critically, make data driven decisions and move sustainably.
For example: Restaurant style pizza ovens cost around $10,000 on average. If you want to open a pizza shop, it would help to know that before you join Costco and buy a bulk supply of mozzarella.🧀
Hey, while we’re on the subject of pizza! 🍕
When you refer a friend to Big Bad, you’ll get a pizza on us!*
Tap the button below to hook up your small business baddies with the support they need (and earn yourself a slice while you’re at it).
*You pick the toppings. They commit to a 3 month minimum of Big Bad Marketing goodness.
4. Who is your business plan for?
If it’s for you, it can be a more informal document in plain language that’s less structured.
If you want to secure funding and get some start-up capital, you’ll need to create a business plan with the eventual reader in mind: venture capital firms (VCs), investors, banks, or your nana.
How to create a BIG, BAD business plan-ish document (that’s not a formal business plan but it’s not a scribble)
If you’ve gotten this far, you’ve qualified yourself enough to say:
‘YES! I am doing this and I need some kind of plan.’
Here’s a line-by-line inventory of what to include on your culled-down business plan.
😎 PRO TIP: Don’t invest hours and hours (or weeks and weeks!) into this. Do a quick and dirty business plan, and refine as you go (and grow!)
8 Things to include in your business plan
Company mission, vision, and north star: Define what you believe in, and where you want to go. Check out our Get Your Biz Sh*t Together Kit so you don’t overcomplicate it.
Competitive intelligence: Know your place in the industry and the market. How does your product or service stack up against competitors? Here’s our How to Do a Competitive Analysis guide. Bonus: there’s a free template download inside!
Value proposition: What makes you different (better?!) than the other bozos in your space? 🤡 We typically say that no business is sooo unique, but in this case the exercise is to hone in on what makes you a special snowflake?
Products and services: Know what you’re selling. LOL. Yes, this sounds obvious, but you’d be surprised. SO MANY offers are jumbled and unclear. A business sells 23425 things or creates custom packages and proposals making it hard to explain what they do. Don’t do that. Come out the gate with compelling offers, and be able to talk about them succinctly. Why? If you can’t explain what you do pretty easily, your prospects probably aren’t going to understand it either, let alone want to buy it! Get clear on how you talk about what you do with a perfect elevator pitch.
Operations: How does your business function? What steps are involved in creating the product and getting it to the end user? How do users access the service? How long does it take?
Market and audience research: Here’s a not-so-secret-marketing-secret: it’s easier to sell stuff when you have an idea of who wants to buy it. Figure out who your ideal customers are and who your target audience is and develop some simple user personas. This may become more specific and change over time, but find a general starting point now, and go from there. This will help you market in the correct channels, with the right messaging, to the right people at the right time.
🥵 If you’re thinking that this is a little harder than it looks, don’t sweat it.
🌟 We are here to help you make sense of your marketing!👉Check out our services page and we’ll get started building a kick-@$$ marketing strategy to help you reach your people.
Marketing channels: Okay, now you know (or at least have a hunch) who you’re selling too. It’s time to figure out how to reach those eyeballs. Figure out where your people hang out.
Digital channels:Social media: and how to choose social media channels that make sense for your business
Search engines: so you can DIY your small business SEO for organic wins
Content marketing: Does your small biz need a blog, podcast, or videos? Content is how you build trust and be iconic
Paid ads: if you have the budget, go after it!
Build your email list: Small business email marketing can be big for your conversions. With a list, you can reach your warm leads and owned audience, anytime
In Real Life channels:
Flyers and posters
Mailers and postcards
Radio, TV, or podcast ads
Events and networking opps
Billboards and buses (go BIG BAD or go home, right?!)
8. Revenue streams: How are you going to make MONEY? Spell it out, and don’t fool yourself. This is your moment to be brutally honest about how much money your idea can generate. Bonus points if you ideate ways to diversify business revenue streams by expanding from just one offer to other (dare we say, ‘passive’) options, like courses, ebooks, consulting, etc. Check out our courses for BigBad inspiration!
Nice fam work. Now you’ve built a business plan that will help you hit your goals without over-engineered corporate-crap!
Your simple business plan can be the foundation you need to launch, grow, and do the damn thing!
Turn your business plan into real revenue
Business plans are great for thinking things through, but they don’t make money.
Talking to leads makes you money.
Building a sales funnel makes you money.
Making sure your offer is solid and your backend isn’t a disaster makes you money.
It’s the messy, day-in-day-out of actually doing business, not the cute business plan fairytale, that will drive you to success. Don’t get too caught up here. Use it as your launchpad to blast off into big, bad, business success.
When you're ready to build your dream biz your way, let’s talk. Book a free 15-minute consultation. We’ll partner to get your ideas off the ground, work out the kinks, and make sure the math and the marketing make sense.
