I have been teaching entrepreneurship courses at the university level since 2008. Almost ten years now. As a millennial, I never understood the almost ritualist focus on teaching business planning. It probably goes unquestioned because the accreditation bodies that audit business schools use business plans as evidence of proficiency on learning outcomes for accrediting business school degrees. However, I suspect this will change as millennial professors start to age into leadership roles at universities and accrediting institutions . Until then, the business plan will remain the cornerstone of most entrepreneurial programming, globally. 

I have read hundreds of plans. I have seen that "brilliant idea" so many times. You know, that idea with the "huge" market and "no" competitors.  The idea that is so dam good that it requires virtually no money to acquire customers because the business will use word of mouth and social media to propel sales, and reach full market penetration instantaneously. Well at least that is what is written in the business plan. I generally bleed red all over those plans and crush the dreams of some eager graduate student or friend. 

I often refer to myself as the - entrepreneurial dream crusher. 

Business plans, in my humble opinion, are useless. Business planning is premised on strategic planning. And there is a big difference when a person plans for and established organization and an emerging organization. How so, well - uncertainty! Established organizations have a more certain environment to deal with than a fledging organization who is trying to maneuver in a market filled with limited resources and often powerful incumbents.  However, some of my unpublished research (currently trying to survive the review process) does show an exception, when done early and formally close from the start date of business conception, planning helps. But, in all reality a business plan should only really be utilized for the purposes of raising capital. And to be honest, the only part an investor wants to see are short term financial projections based in reality. That means you have to have sales already people.

If you don't have sales why are you planning a fantasy?

Business planning is useful if it helps you think and prepare for contingencies. Not if you are trying to blow smoke up your own ass. Under constraints and time pressure the utility of planning fails. It is not an exercise to be your own cheerleader. It is quite the opposite. It should make you acutely aware of how hard it will actually be to get your organization of the ground. I really think that you should only write a plan after you are making sales, and you are trying to figure out the "where do we go from here?" question. Basically, how do we take this business to the next level.

Again, my unpublished research suggests that if an entrepreneur has already started the process of venturing, and find themselves in the thick of it, informal planning is more useful than formal planning. And by the thick of it I mean the tar pit you are trying to pull yourself out of because you are not making sufficient sales to cover costs, and you have been trying already for sometime. Informal planning is the kind you often  jot down on back of the napkin, with succinct targets and few bullet points. This sort of planning helps founders reach profitability because it linked to goal setting. Goal setting is very straight forward, it literally is about setting goals so you get motivated regarding the task at hand. It is probably one of the oldest and widely accepted theories in management research. Not rocket science here people.

If you are not certain you can even make sales, another approach might be more useful, like experimentation. The business model canvas (BMC) framework is one of those informal planning approaches I really like. The BMC is a great way to experiment and understand your business model.  It really helps people use the scientific method to test assumptions about their business model and make adjustments as they get feedback from the market. And if you have problems making sales, you likely will understand why and adjust accordingly. Unlike a business plan, where you try to convince yourself you are right, and ignore market feedback.

The video below by Diana Kandor is a great example of what I am talking about. An entrepreneur with a great awesome idea flops, because she spent way to much time planning, and not enough time experimenting. The marshmallow game is one I also use in class, not to just bring the point home - but we all get to eat marshmallows during class too.