If you don’t plan your business because you don’t need a formal business plan document for a loan application or investors, you’re missing out. Planning is a tool for steering and managing your business – something that benefits all businesses, whether they need the formal document or not.

That fear and doubt so many business owners have (are you one of them?) is associated with several dangerous myths about business planning. So I want to dispel those myths with this post.

1. It’s about the management, not the plan.

Your plan exists to help you manage. It includes only what you need for its function, which is setting strategy, tactics and concrete specifics. You use it to track performance against plan, review results, and revise regularly, so the plan is always up to date. And that’s not a big document; it’s a collection of lists, bullet points, reminders and projected business numbers. I hope it’s gathered into a single place, as if it were a document, but it doesn’t have to be. And it’s only as big as you need, as polished as you need, as formal as you need.

Your business plan document, if and when needed, adds a lot of description and supporting information that aren’t in the main plan. That’s additional dressing. You add it when you have to in order to show a plan document to outsiders.

Every small-business owner suffers the problem of management and accountability. It’s much easier to be friends with your coworkers than to manage them well.

Correct management means setting expectations well and then following up on results. Compare results with expectations. People on a team are held accountable only if management actually does the work of tracking results and communicating results, after the fact, to the people responsible.

2. Not all business planning needs rigorous market analysis.

Contrary to the myth, a business plan doesn’t have to include supporting information to analyze or prove a market — at least, not until later, if and when the business purpose requires it. Not that you don’t have to know your market — but you don’t have to describe it or prove it for a lean plan. You don’t have to show some outsider who you are, what you own, or any of that.

You don’t have to do a rigorous market analysis as part of your plan if you know exactly what you’re offering, and to whom. So what about market analysis? Think about the business purpose. Do you need the market analysis to help determine your strategy? Then do it. Are you ready to go with that strategy regardless? Then don’t sweat the market analysis.

3. Good planning doesn’t reduce flexibility. It builds flexibility.

People say, “Why would I do a business plan? That just locks me in. It’s a straitjacket.”

And I say: wrong. The dumbest thing in the world is to do something just because it’s in the plan. There is no merit whatsoever in following a plan just for the plan’s sake. You never plan to run yourself into a brick wall over and over.

Instead, understand that the plan relates long term to short term, sales to costs and expenses and cash flow, marketing to sales, and lots of other interdependencies in the business. When things change — and they always do — the plan helps you keep track of what affects what else, so you can adjust accordingly.

It’s not like change undermines planning; actually, planning is the best way to manage change.

So running a business right requires minding the details but also watching the horizon. Eyes down, eyes up. At the same time.

The author

Founder and Chairman of Palo Alto Software and bplans.com, on twitter as Timberry, blogging at timberry.bplans.com. His collected posts are at blog.timberry.com. Stanford MBA. Married 44 years, father of 5. Author of business plan software Business Plan Pro and www.liveplan.com and books including The Plan As You Go Business Plan, published by Entrepreneur Press, 2008.