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To business plan or not to plan?

For a small business, creating a five year plan can be a game changer

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Studies show that long-term planning for businesses can have measurable impact. So, for an emerging business – or one that’s pivoting – what key elements are necessary?

The good news is that there’s no one-size-fits-all equation, just as there’s no one-size-fits-all business. The even better news is that there is an abundance of resources about how to create a five-year-plan that’s right for you. From the classic Harvard Business Review article aptly titled “How to Write a Great Business Plan” to the detailed outlines provided by the Small Business Administration, creating a customized business plan can be as simple as one, two... five years down the road.

According to Harvard Business School Professor William Sahlman, the author of How to Write a Great Business Plan, a plan must not try to predict the future, but instead, serve as a road map of how events could unfold. Approaching a business plan this way leaves room for adaptation and iteration – the kind of flexibility required to weather an unanticipated event, like a global pandemic, say. All the while, having the plan on paper will keep key milestones and the larger mission in sight.

As a practical toolkit, the Small Business Administration (SBA) details two roadmaps for business plans – one, a lean startup, and the other, a traditional business. A new business looking for the right plan can go through the SBA checklist to see which plan fits best, and where to customize. Hint: the traditional plan is more detailed and takes more time to write. It’s also the type of plan lenders or investors would likely request to see.

That said, the ABCs are remarkably similar across the two. Both the traditional plan and the lean startup plan require the business owner to articulate their mission, structure, team, industry, and where they plan to grow. After all, by putting pen to paper, an entrepreneur is already moving the needle from vision to reality.

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