How Important is a Business Plan?
When I meet entrepreneurs for the first time, some of the initial questions I field are in reference to a business plan. From foundational inquiries like “How important is a business plan?” and “What’s the best way to communicate the value proposition?” to detail-oriented asks like “What’s the right format?” and “How long should it be?” it’s fair to say I’ve gotten a variation of “How important is a business plan?” a lot. And in vetting the submissions we’ve received for Ask Jenny Anything, we know some of you are curious about it as well.
Today I’ll share with you the same response I’ve passed along to them:
You’re not going to have everything figured out from day one.
Don’t get me wrong. Having goals for your business, and a trajectory for how to get there is smart. But the challenge here is that worrying too much about the business plan, in the beginning, can make you less nimble over time.
You are going to learn the most about the business you’re building when you begin testing and learning with the customers you’re looking to serve. No matter the type of business you’re overseeing, there is inherent value in getting a brand, service, or product out to your customer base as soon as possible.
When co-founding Rent the Runway, my co-founder Jenn and I did not have a business plan. We were focused on getting things done and proving to ourselves that this was a good idea and a good business. At the speed we were moving, we didn’t take the time to write a 30-page document. And I’m so glad we didn’t.
What we did instead was invest our time and energy elsewhere, creating a pathway to opportunities for education and experimentation.
We quickly learned we weren’t going to have every single answer, and in fact, that we’d have more questions than answers. So we embraced the unknown, tapped into our collective curiosity, and accepted the many possibilities for how the future — and our business idea — could evolve.
That led us to meaningful conversations early on in our journey. We met with key constituents to gather feedback that would inevitably help us outline a tactical plan for building the Rent the Runway business, turning a profit, creating partnerships, and, most importantly, delighting customers through our experiences.
At Harvard University, we purchased dresses and launched a pop-up store on the lawn to talk with young women about their interest in renting the runway for a special occasion. We surveyed event attendees through video interviews and aggregated anecdotal insights to inform business demand. Not only did that translate to demonstrable proof of concept for our potential (and soon-to-be official) investors, but it illustrated our willingness to hustle, a game-changer in our fundraising efforts.
Beyond that, we leveraged our vast professional networks to connect with industry experts across fashion and retail, sharing our vision and getting their perspectives on Rent the Runway. Doing so allowed us to tweak aspects of our business for the better, and we were able to understand the answers to our questions before we threaded our thoughts together to root a business plan in reality.
Instead of trying to make a perfectly manicured business plan from the get-go, keep it simple. Yes, you can create a deck for investors, partners, and others you’re explaining your concept to. But don’t get mired in the nitty-gritty. Focus your energy on proving to yourself that this is something you want to work on by actually getting started, and that traction will show hustle to investors and give you real consumer feedback and learnings that can tell you if you have not just an idea, but a business.