Plan of Attack Is a business plan really necessary for a homebased business?

QUESTION: I recently read that the importance of business plans is overrated. To start a homebased business, do I need to have a business plan?

ANSWER: We salute you for both taking to heart what you read, while at the same time, not taking something in writing at face value. We have long held that the value of a business plan for a start-up homebased business is to provoke the thinking you owe yourself before risking time, money and energy on a new venture. Now the research is in.

Peter Economy, the co-author of Lessons From the Edge (Oxford University Press), interviewed 75 entrepreneurs whose companies were producing more than $1 million a year before the owners reached age 40. "They said [if they had to do it over], they would not have done a business plan," says Economy. "They expressed the belief that it's better to dive in than to plan every move. The only time they needed a formal business plan was when they went to get outside financing or funding."