Write a Business Plan?

[KLPInvestments]

I always felt it was a useless exercise to write up a business plan before starting a company. Well, I found this quote by a Venture Capitalist....

"Business plans are bullshit. You may think they are great but I haven’t seen a VC ever read a business plan or fund a company based off of one. I could be naive, but I think they would rather have you spend your time on launching your company compared to writing a 30-page document"

I tend to agree. Writing a business plan will have no bearing on the success or failure of your company....and may have very little influence on potential angel investors or venture capitalists.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[MrPink]

others insist on having a business plan - to each his/her own.

 

[ZDS]

It's all about what works for you in my opinion. Obviously everyone has a "plan" while starting a business. Whether you need a formal one or not depends on your investors, and how much structure you need as a person.

 

[PaulRobert]

IMO, I believe that a business plan is somewhat overrated. You need to have a plan when starting up a business, but it doesn't need to follow an exact guideline. Focus your time and energy more on starting up and running your company than just writing about it. If the time comes that you need to write a plan for potential investors or VC capital, you will.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[Caesarion]

It's part of the movement. Whether you think it's important or not, it's a formality like getting a degree from a college. If you have it, it helps. If you don't....well, you better have something comparable to replace it.

You right, they rarely read it. But they want to know you are capable of putting one together.

 

[randallg99]

...Writing a business plan will have no bearing on the success or failure of your company....and may have very little influence on potential angel investors or venture capitalists.

IMO, I believe that a business plan is somewhat overrated. ....

From reading the above comments, I wonder what your impressions of a business plan are.

One of the most important thing I've learned in my 16 years of owning my own businesses is that being able to follow (and more importantly sticking to) a plan is crucial for success.

By following a plan, it avoids any emotional influence and any distractions that cause bad decisions.

A very well written plan, with concise and thought out steps that covers all scenarios enables the principals to correlate all decisions that coincide with the original plan.

 

[PaulRobert]

IMO, I believe that a business plan is somewhat overrated. You need to have a plan when starting up a business, but it doesn't need to follow an exact guideline.

From reading the above comments, I wonder what your impressions of a business plan are.

By following a plan, it avoids any emotional influence and any distractions that cause bad decisions.

A very well written plan, with concise and thought out steps that covers all scenarios enables the principals to correlate all decisions that coincide with the original plan.

I did not say that business plans are not important, everyone needs a plan but they do not have to follow a specific guideline. I believe that when creating a business plan, you should write one up that best fits you and gets you to complete your goals and strategies. I have written up a business plan and it clearly states my business goals and strategies. It is simple and probably not something I would give to an investor. Hope this clears up some confusion and questions.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[BeanCounter]

As was said above it depends on your goals. If you are raising capital from outside sources a formal business plan is a must.

An informal business plan also helps you flesh out your plan and forces you to take a look at the numbers. A lot of failed businesses would never have been formed if the owners had taken the time to crunch the numbers and do their homework before hand.

The process is a worthwhile one if only for you to see what it would really take to operate such a business.

Would you drive your car at night with no headlights on?

 

[mkzhang]

Business plan is useless in the sense that you should know how to run your business or make revenue without one, because its in your head.

Business plan is useful for people wanting to invest in you, and its basically an essay form of a FAQ to your business.

 

[randallg99]

Business plan is useless in the sense that you should know how to run your business or make revenue without one, because its in your head.

of course one should know how to run their business or create revenue regardless of a biz plan, but a well written and properly executed business plan can create a very viable business without needing your hands-on to "run" the business...

Business plan is useful for people wanting to invest in you, and its basically an essay form of a FAQ to your business.

Investors today want more than just an FAQ or an essay when they're investing money. There's probably less scrutiny for deals under 100k, but I don't know.

This is a tough time to attact money to businesses (start up or existing) so a well thought out and written biz plan is crucial.

That said, I've seen 100+ page business plans with elaborate slideshows. And even then those are still having trouble attracting funds.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[mkzhang]

I think what I meant is that the "master plan" is in your head, after all... you're the boss right? The reason why your employee can't run the business some where else even they know the "business plan" is maybe they don't have the execution or experience.

But again, the written business plan is just a FAQ to me, whether or not you write one, you should know how your business goes.

Randall:

Maybe you are more experienced than me, but I am dealing with investment amounts (IPO) of more than 20 million at the minimum. All the business plan is, is a 20-30 page FAQ.

Business plan doesn't bring in funding. It helps to answer the question though.

What brings in the funding is the business model, the growth, the financial models, and a strong bank or investor group to back up the company. Most importantly, you need someone to really create a buzz and sell the story on your company, even the best company cannot bring in funding if it sounds stale and boring.

 

[MJ DeMarco]

Business plans are nothing but ideas on steroids ... if you don't have a track record of execution to back up the business plan, they are worthless.

A business plan given by some guy with no experience, no execution, no wins = USELESS and not worth looking at.

A business plan given by some guy who sold his company for $40 million 3 years earlier? VALUABLE and Worth Looking At.

A seasoned executioner of the business plan validates it, without it, its nothing but a worthless 100 pages of Kinko's bound collateral that shows you could put together a college-level report.

Mind you, this "take" is NOT a recommendation to skip financial analysis about any particular business/investment.

 

[EastWind]

i don't think it's useless to write a business plan.

a business plan is a PLAN. those who fail to plan, plan to fail. it's a PLAN, a GUIDE, a sort of direction your company will take.

every so often, you can look at it, and see if your company is going in the said direction. If not, that doesn't mean you are off track, it can simply mean your vision is much clearer, then it's time to reupdate the PLAN.

Some people are good with mapping things in their mind, and you can give them direction from Miami to California, and they wouldn't need to write it down or use a GPS and they will get there. For such people, there may be no need for a business plan. Some people are more grounded when they write things down. It's all about making it work for you.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[CommonCents]

The VC's may say that because most business plans are crappy but that doesn't mean a well researched biz plan is extremely valuable. I just read a 32 page slick looking plan and I couldn't tell what the damn business was!!! Terrible. Full of fancy words, buzz phrases, acronyms but ZERO substance. Fail.

A good well thought out biz plan shows you are prepared and ready to mitigate risk ensuring the best chances to success.

Biz plans are just a written check list of what you need to do to be successful. Biz plans should be good guidelines on execution. I can't keep everything in my head, gotta write it down.

Skip the fluff and stick to basic research and execution. Specifically what you are going to do and how you are going to do it.

Many confuse business plans w/ slick marketing/PR material. Two different things.

 

[randallg99]

I think what I meant is that the "master plan" is in your head, after all... you're the boss right? The reason why your employee can't run the business some where else even they know the "business plan" is maybe they don't have the execution or experience.

But again, the written business plan is just a FAQ to me, whether or not you write one, you should know how your business goes.

Randall:

Maybe you are more experienced than me, but I am dealing with investment amounts (IPO) of more than 20 million at the minimum. All the business plan is, is a 20-30 page FAQ.

Business plan doesn't bring in funding. It helps to answer the question though.

What brings in the funding is the business model, the growth, the financial models, and a strong bank or investor group to back up the company. Most importantly, you need someone to really create a buzz and sell the story on your company, even the best company cannot bring in funding if it sounds stale and boring.

in this economic time, the biz plan is probably one of the single most important items to attract funding (besides character and experience of the principals)

I find it difficult to comprehend that investors would consider a company whose 30 page biz plan is just an FAQ.... the ones I have seen and even helped contribute included comprehensive marketing strategies, demographics of the consumers, real estate listings and acquisition data, etc, etc, etc, etc, and even more etc... these were very intense biz plans and are securing funding of 50mm privately.

It behooves anyone "who knows how their business goes" to construct an operational plan and insert that information right into the biz plan. Afterall, these ideas need to be formatted anyway.

what investor would want to throw 20mm of funding at a company with just an FAQ? If I am investing in a project that I've never heard of before, I would really want to know the intrinsics of the business, the daily operation, the goals, mechanics, number of employees, job descriptions for them, etc.

I am not experienced in IPO's, that's a different ball game. There were only 58 of them that came to fruition in 2009 so you obviously have a handle on this and you are apparently on wall street if you're working with the IPO market. These investors that IBs are selling to are probably buying a lot of sizzle as you've mentioned, but a lot of the costs gets trickled into the investment brokerage house instead of the shareholders.

 

[milliona]

If you want your business to have personality and focus, of course, you will need a business plan and convey it to the investors in a way that they, too, will want your business to materialize and succeed. Hire someone skilled in this, work closely with him, and pay him well. Investors may say no but if your plan is done professionally, well-researched, and you really have some solid ideas, at least you left a good first impression.

Think outside the box. It may not be a popular business or something they have heard of but if you can present a good plan, you might have a chance. More than money, it's all about ideas...good, solid ideas backed by a well-thought out presentation.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[Lance Johnson]

As a dude just starting out, I feel like (I don't know for sure since this is my first time doing it) that as some of you guys mentioned a PLAN is crucial, but the section-by-section "Business Plan" seems like utter nonsense.

So, I made a Business Mind Map. Something to give me a framework to operate off of. Basically I laid out my end goal, and the stuff in between. Granted, some of the stuff in between I have no idea how to do, but I don't need to learn them until I get there. Right now, it's all getting started.

Here's what I put in my Business Mind Map:

• Hedgehog Concept (Think Good to Great
• Needs I'm Focusing on Filling
• Marketing Strategy
• Sales Strategy
• Company Characteristics
• Community Involvement & Social Responsibility
• Start-up Financials
• Progress Mechanisms

It's not all perfect, but I think with a mind map you can work the kinks out along the way.

 

[GuestAcct-10]

This is probably the best advice I've come across for business plans. He's pretty much saying you should write one but it doesn't have to be overcomplicated.

[ame=http://www.youtube.com/watch?v=QxqfxXAN4rk]YouTube - Should I prepare a business plan? - Lord Sugar's Business Basics[/ame]

 

[Russ H]

We've gotten over $1,000,000 just in the past 12 months from the SBA.

Long term, low interest rates. For the second set of loans, we didn't bring *any* cash in the deal ourselves.

How did we do this?

We had a good track record (millions in loans guaranteed by the SBA already).

Oh-- and we needed to write a business plan. Twice.

Do I like business plans?

-Russ H.

PS We also had to fill out a mountain of paperwork, and provide supporting documentation-- which we have. This explains why WE got the SBA loans and no one else we knew did. We were happy to wade through the red tape.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[Lance Johnson]

Russ, that's pretty awesome.

We had a good track record (millions in loans guaranteed by the SBA already).

This might be too personal of a question, but how did you get started with SBA loans? What got you started with that track record? Did you use an existing business with a track record already, and get a loan for expansion that didn't carry as much risk?

Oh-- and we needed to write a business plan. Twice.

Was this a business plan with all of the standard sections, or do you sprinkle something special in to make it more applicable to the SBA deal?

Again, that's pretty awesome. Keep scoring those bad boys.

JMJ -Lance

 

[unicon]

A Master Business Plan is essential for a purchase of a good size business, one may have sub-plans for investors, customers, vendors, bankers, etc.

The most important reason for a business plan is for yourself, the story should be a road map for your success.

The more comprehensive it is the more successful you will be, this assumes no waste and 100% productivity.

What some of the posters don't understand is that the plan is invaluable when things or something goes wrong, you are stripped of cash, or attacks on your business takes place which all take up time and money. Every list you have in your business plan is one less list you have to log when you have no time left.

My own plan allowed me to survive the unsurvivable, it allowed me vision to see what would have been impossible to see, finally it bought me time when I had no time left. Formalization of the plan was critical.

The example of doing a business plan for an SBA loan is nothing if your master plan answers all questions in advance. You just copy some of your master schedules and the story and attach to the SBA or any other lending institution. I personally had approved six figure loans from the SBA which I turned down because of their collateral and control requirements (in addition they did not know their own terms and incompetent).

The Plan is for you and it is the future story of your success anticipating every contingency. Failure to plan is a plan to fail.

One does not write plans for institutions, you write them for yourself. They will be more comprehensive and valueable than any institutional requirement and will in fact enable you to control those institutions and get what you want.

Plans are about information and information is everything.

 

[michael]

Here's what I put in my Business Mind Map:

• Hedgehog Concept (Think Good to Great
• Needs I'm Focusing on Filling
• Marketing Strategy
• Sales Strategy
• Company Characteristics
• Community Involvement & Social Responsibility
• Start-up Financials
• Progress Mechanisms

It's not all perfect, but I think with a mind map you can work the kinks out along the way.

In the last week I'd put together a rough plan for distributing and marketing a product I have developed to solve a need but never really though of putting down on paper the need I am aiming to cater to and I had ignored financials progress mechanisms; I'll make sure to incorporate these into my plan before I blindly waste my savings by pouring them into a company with no sense of direction.

Rep speed to you.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[Smooth]

I wrote an article about this. The fact is that the importance in writing a business plan is not the final product of the business plan, but the process of actually writing it.

I cannot tell you how many times writing a business plan saved my business. It forced me to analyze my market and decide the best way to move forward with sales and marketing, forced me to research my competition and my industry, forced me to forsee problems that would have been devastating but instead plan ahead and avoid them.

The business plan is not the point. The process of writing it is where you get the value.