Business Plans are Guesswork _ Almost everything you write in your business plan will be guesswork. Even worse, there'll be some pretty inflated and optimistic claims in there that won't reflect reality at all. Here's some reasons why you're going to be doing a lot of guessing: You don't really know how many widgets you're going to sell until you try to sell some. You don't know what price point to use until you test to see what your market will accept. You don't know whether your customer even wants your product/service until you find a market and ask them. You don't know how to market your business until you try various methods, split test and see what works. You don't know how new tools like Twitter might transform you business, if they aren't yet invented when you write your five year plan. So we've established that a business plan is largely a work of fiction. What other reasons are there not to write one? They Give You a False Sense of Security _ I don't mind admitting I've written business plans in the past for some pretty bad ideas. Yet, I managed to make the business sound really viable, enough to fool even myself. This is a dangerous thing to do because having a plan in place which looks great can give you a false sense of security. With all the guesswork involved you'll have a free rein to make your plan reflect what you want to happen, rather than what is likely to happen. This can lead you to think you have a great idea when maybe you don't. If you use your plan to convince other people it's a great idea then the problem can escalate. Now those you seek approval from also think it sounds like a good idea, all based on fiction. Those who have read anything I've written before will already know that I believe guesswork doesn't contribute to a good business mindset and should be avoided whenever possible. It's best to just take action, try it out on a small scale with minimal cost and you'll know very quickly whether it's a good idea or a terrible idea. Writing a plan doesn't make your idea any better, it jut makes it sound better.
Developing Planning Modules: Compartmentalizing your plan by developing planning modules or "chunks" allows you to attack the plan in parts, yet still maintain a cohesive plan. I have found that developing an annual plan made up of quarterly targets _ thus becoming a rolling quarterly forecast financial model _ allows for a cohesive structure along with the nimbleness to react to market conditions. At the end of each quarter, a true_up process to align results to annual targets needs to be re_forecast and adjustments made.