“‘He who fails to plan is planning to fail,’” said Omar Sati, the Managing Director at DASH Ventures in Jordan, quoting Winston Churchill, when I asked him about the importance of a business plan.
But he’s not the only one who believes that having a business plan is important for startups. Any traditional business school will teach you the same thing. Many startup founders, however, swear that business plans are useless and only limit your potential; after all, you'll never be able to perfectly predict how things turn out.
To settle the debate, we decided to ask the audience what they thought, with a recent poll. We asked: “Do you think having a business plan is necessary before launching your startup?” Here’s what the audience said:
Out of 27 responses, many agreed that startups should prepare a business plan as a set of guidelines to keep the team on track, especially if they’re looking for investment. “If you’re looking for investment, of course,” replied Ivana Daher, the Excecutive Assistant at The Cairo Angels. “Yes, without a business plan you will get lost,” added Ashraf Gabr.
But respondents agreed that if you do make a business plan, there are a few things to keep in mind:
- Back your plan with action: As a founder, you should first do your due diligence, create a viable prototype, and collect feedback before drafting a business plan. The plan itself should be full of statistics and research describing your market and the projected opportunity. Most investors probably won’t invest just because you are passionate and ambitious. Having solid evidence is key. “You can't have a fully-fledged business plan before the launch of your startup,” said Shaza Kandaji.
- Be brief and to the point. “The common perception of a business plan being a 50-page Word document filled with industry jargon, financial forecasts, graphs and charts, is irrelevant today,” says Sati.
“A one page business model with bullet points will do better than a long written business plan; it will help identifying strengths and weaknesses, reminding you of your core idea, keeping your standards and most important, it saves you valuable time!” explained Tariq Mahmoud Abdlehaq, the Founder and Managing Director at Tawlat.com
- Use it as good practice. Taking the time to work through where you think the company can realistically go and how you plan to get there can help you better understand next steps and keep you on track moving forward. “I used to say no [to building a business plan], but now I'll say spending 3-7 days building a business plan for yourself (NOT FOR INVESTORS) is not a bad exercise at all,” said Wamda contributor Abdullah AlShalabi.
- Make it flexible. It’s ok to constantly rework and iterate your idea; a company should be fluid, constantly changing to meet new customer needs. Likewise, a business plan “should be flexible, revisited, and refined over time,” says Sati as it keeps up with your startup’s progress. “Definitely to have a road map, with the flexibility to change during implementation according to variables,” agreed Zeina Allam Adra from Best Bank Deal.
Others disagreed however, saying that a business plan is either completely unnecessary or are only necessary at a certain point. Some just outright said, “Absolutely not,” or, “Nope, not if you want to have a dynamic startup.” Others had more nuanced views, stating that traditional business plans are outdated; instead, founders should take advantage of the “lean canvas,” an easy business modeling one-pager that helps you brainstorm and succinctly describe your value.
“Plenty of business plan papers are just a waste of time! What really matters is what is in the back of your head,” said Tariq Mahmoud Abdelhaq. But the Young Arab Leaders – UAE Chapter responded by saying that writing a good business plan is only useful for one thing: it helps you personally understand your business better.
In an email, Ahmed Abdulwahab from Kaust told us about the "unvalue" of business plans and why it is important to "go outside the center/lab and talk to customers, partners", validate your market, develop a minimal viable product (MVP) and return to customers to validate it. Once you do that, you can start thinking about writing your business plan.
So is writing a business plan really important before launching? “The definition [of a business plan] itself has changed over the years and takes different forms for different stages, a business plan's goal is to help guide a company in the future based on some market data but mostly on present and recent past metrics,” says Wamda’s CEO Habib Haddad.
He adds that if your startup is new and without any data, you should “first build a product or prototype” to begin testing and collecting your own metrics, or jokingly adds, “hack into your direct competitors’ servers” to see their metrics.
But as a startup begins to scale, and to look for investment, having a clear and sharable plan is important. Ultimately, whether it’s a short one-pager or a more thorough industry overview, investors need to be able to weigh and clearly see a startup “team’s ability to build the future,” he says.