It has been almost six years since I wrote this article
defending the importance of business plans. I have since read many more articles arguing against writing formal business plans. (And, I have since written more about why we do need business plans and what crucial information should be included in them.)
Aside from the business plan detractors, there is also a new movement to replace the business plan with the “business model”. I am just about to complete an MBA at the University of Chicago Booth School of Business, and I will earn concentrations in Entrepreneurship, Managerial Strategy, and Finance. In multiple courses, we have been taught that business models such as this one
developed by Alex Osterwalder
and Yves Pigneur are crucial to entrepreneurial success. We have further been told that the business model is replacing the business plan.
Here’s the problem. This is all an exercise in semantics. When an expert recommends against writing a formal business plan, he or she usually outlines the important facets of your business that you must understand and be able to communicate. When a new business model is proposed, it also includes categories of information that a business must think about and present in order to be successful. The Osterwalder and Pigneur business model uses nine major categories. And, within each category, there are further details to be filled in. So, in my opinion, when you think about and communicate the important characteristics of your business and when you fill out a business model, you are completing a business plan. The important categories are largely the same whether your plan consists of a file folder of information, a deck of slides, a business model, or a formal business plan. Even though, it’s out of fashion to call it a “business plan”, that’s what you have created.
So, we will move forward from talking about the arbitrary form of presentation to talking about the frameworks, themselves. We will talk about what is important and what to include, and we will present outlines, frameworks, and models that will actually help you think about your business.
Thanks for reading!