MGG Consulting, LLC

Why Bother?

Should you even have a business plan? And, if so, why and who should write it?   

In previous posts Thinking In Advance, Visioning and A Written Plan: Key To Collaboration described essential activities that a business planner must practice. Now we come to some basic questions. Should one even write a plan? And if so, who should actually write the plan?   

No Plan
   

I’ve read some blogs that scoff at writing business plans, since “no one reads them anyway.” These proponents are not all wrong. Read David Cowan’s blog post, Who Has Time For This? How To NOT Write A Business Plan posted on November 17, 2005. David is a venture capitalist and his approach is direct, refreshing and cuts right to the chase. If you’re looking for VC backing, you’ll only bury them with a lengthy and lumbering business plan. David would prefer a 10-12 slide PowerPoint deck that he describes in his post.   

Plan   

David’s advice, notwithstanding, the VC is only one potential player for an emerging business. Writing the business plan is more of a process for the visionary than an end in itself. The 10-12 slides PowerPoint deck is absolutely essential as a highlight presentation but you’ll still require a somewhat detailed plan if only to execute the steps required to evolve from vision to reality. Said another way, if your 12 slide presentation raised all the funds you needed for startup, then what?   

Business plans go way beyond “vision” and challenge the feasibility of concept and implementation. They uncover some ugly stuff like product or service liabilities and unintended consequences, all of which you’ll want to deal with to lower the risk of your offering. The plan forces you to say exactly what value you will offer and what it will take you to produce (experts, administrative staff, facility, purchases, etc.) all leading up to some “Startup Cost.” It will force you to think through being successful, how you will grow, how you will need to evolve your ideas and methods to suit different buyers.   

The “VC” might challenge the vision and some assumptions based on a slide deck, but his due diligence team will look a lot closer. So do we write a plan for the VC or for ourselves. The answer of course is the latter. After all, most small businesses and startup firms don’t have access to or even think of using venture capital. Most small enterprises pony up the startup funding from their savings or loans from family and friends. All the more reason to plan carefully.   

The Best Author
And who should write the business plan. Ideally, the future owner should write the plan.   

Helping Hands
If you’ve never written a business plan or writing is not your strong suit, there is plenty of help waiting for you. There are plenty of outlines, free plan samples and software tools available on the internet. Google “Sample Business Plans”.  Additionally, there are services available that will interview you and charge a fee for preparing a written plan. These plans range in cost from a few hundred dollars to several thousand dollars. Some even do market research for you.   

The author may still require assistance depending on how much business experience he/she has or how fast he/she wants to write the plan. Samples you may find are good as far as check lists are concerned indicating what should and should not be included. Typically plan lengths should not exceed 30 pages. That said, research, financial analysis and supporting documents can and should be included as appendices and these can add considerable length to the overall document.   

Don’t Write It and Put It On The Shelf
No matter what decisions you make, don’t avoid writing and owning your business plan. It will help you make day to day decisions. It will help you know if and when you’re “coming off the rails”. It will even help you activate exit strategies or know it’s time for a re-write.   

What are your thoughts?

If you have the best and most unique idea about a new or existing business, you would be well advised to share that idea with colleagues that are your trusted advisors.  A friend of mine used to say, “Getting the right people on the bus is the most important thing you can do because then the bus can go anywhere.”

Get On the Bus

Your good and unique ideas will take you on a journey from the initial business conception to its business realization.  And much like “the people on the bus”, you and your trusted advisors need certain strengths and capabilities to arrive at an achievable and profitable place.

So who should be on this bus?

1. A subject matter expert – to assure the feasibility of your business idea and its dependencies.
2. A Financial Professional – to do some quick tests even before you write your business plan.  A quick, go, no go, can save a lot of wasted time.
3. A Marketing Professional – to test and enhance your value proposition, to measure and segment target markets and to help with pricing and communications.
4. A Legal Professional – depending on how you choose to go to market and raise necessary capital, you will need legal services.
5. A Banker – to guide you through your funding options and their consequences.
6. A Risk Management Professional – to assess inherent and consequential risks and design in a risk management plan to eliminate or mitigate potential risks.
7. Experienced Business Advisor – that can act as the “team captain” for all the professionals named above and your business confidant.

If you don’t know or can’t afford all of the professionals listed above, an experienced business advisor should be able to create the material for brief reviews by those professionals.

Share Your Ideas

Writing your business plan forces you to carefully consider your ideas and their consequences so you can step back and begin to develop the necessary objectivity required to go to market.  Writing your plan allows you to share your ideas with trusted colleagues and associates to get their feedback and direction.

The written plan, then, enables collaboration.  It strengthens your ability to tell your story in ever shorter amounts of time.  Graphs, pictures, charts can be extracted and used to articulate specific points.  The written plan offers transparency for others to understand and challenge your assumptions making your plan ever stronger.  Challenge and response gets the plan ready for skeptical investors or loan officers.  So the more collaboration you do, the better your preparation for funding challenges.

Got Legs?

Lastly, don’t be dismayed if the “bus ride” ends somewhere you hadn’t envisioned including back where you started!  The written plan will either “have legs” or not.  In the unhappy event that your plan does not “have legs” you will be disappointed but not broke.  If your plan is worthy of proceeding you will have everything you need to garner the financial and managerial support required to succeed.