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[NOTE: This post is part of a series on Entrepreneurship 101 to give a kick-start to those who are thinking about starting their own business. Our regular Job-Seeking and Career-Improvement programming will continue soon!]

I know every business book and business site everywhere tells you that you need to build a business plan. But, just between you and me, is it true?

Will a business plan make your business succeed and the lack thereof make it fail?

Well, yes and no. Today, we’ll talk about what business plans are, in what circumstances you need them, and a little bit about what I like to call “business plans for the 21st century”.

Join me, won’t you? I promise not to be dry-as-week-old-toast boring about it, too.

WHAT IS A BUSINESS PLAN?

Basically, a business plan is a way to prove to others that you’ve really thought about your business and aren’t jumping in without having taxed too many brain cells.

There are a number of sections to a business plan covering all of the major areas that you’ll need to be aware of and managing once you start a new business.

For instance, you’ll need to be able to clearly state:

• What You’re Selling - Duh.
• What You’re Different / Better / Faster / Stronger Than What Is Already In The Market - Most businesses gloss over this with, “The market is $75 bajillion and if I only capture a fraction of a percent of that market, the company will be profitable.” Don’t do that.
• Who You’re Selling To - A little more closely defined than, “people with money”.
• How You’ll Be Successful - Frankly, if you have an “in tune with reality” explanation here, you’ll probably do well.




• Who Will Run What - Yes, we all know that everyone will do everything, but someone’s got to be in charge of each area (sales/marketing, product/service development/implementation, personnel, finance, etc.) This also serves to get people’s names in black and white as “committed to this idea”.
• How You’ll Manage Your Money - Whatever money you actually have (not “hope to get through sales”) - how are you going to spend it wisely?

Here are some good samples of various types of business plans from SCORE.

So, do you really need to spend all the time putting together a business plan?


WHEN DO YOU NEED A BUSINESS PLAN?

Guy Kawasaki cites some research (advance warning: that link is a Word document) that says it makes no difference…

..As long as you’re not seeking funding from anyone.

I agree and disagree.

Do you need a business plan to start a business and be successful? No.

Do you need a well-organized plan to ensure that you’re carefully looking at all the potential areas, competitors, and risks of your business? Yes.

Do you need something to show potential partners, employees, vendors, early customers, and potential board of directors members? Absolutely.

However, what you don’t need is a highly technical, 345-page, doorstop of a treatise on how wonderful your business will be. What you need is…


A BUSINESS PLAN FOR THE 21st CENTURY

So, if you’re not going to write a big, long, boring document for your business plan, what do you do? It being 2007 (or thereabouts), you make a presentation!

You should include all of the same major elements from a business plan, but condense them down (and make them a little more interesting) in a PowerPoint (or whatever program you’re using) presentation.

I hate to repost every single thing from Guy Kawasaki’s blog, but he is one of a very few people who is posting about the reality of this situation.

So, here’s a great, short look at how to set up your “pitch” presentation by Bill Reichert of Garage Technology Ventures.

The guy looks at these things every day, so he knows what investors are looking for. And don’t fool yourself - everyone who has anything to do with your business is investing something.


A FINAL WORD ON BUSINESS PLANS

A business plan document, or even a presentation, can be so boringly painful to make you feel like you’re being crushed by a boulder. Or wish that you were.

However, when you hear the business plan or presentation explained by a good businessperson, he adds life to that boring document. He gets excited to show how things will work, why they’re going to be successful and how cool it’ll all be.

In fact, this is primarily what Venture Capital folks are looking for - the passion that you have for your business. Because they know there’s a good chance that your passion will carry you through all of the unpleasant surprises you have in store for you. If you don’t have a passion for your business, there’s no chance you’ll survive.

This should also be a good indicator to you. If you can’t get excited about your pending business and explain your business plan / presentation (coherently) to others, you should stop now and either come up with a new business or go back to corporate America.


Next In The Entrepreneurship 101 Series: The Biggest Causes of Small Business Failure


Enjoy the Search!

Dan


Photo by: $h3ll|r00t

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This entry was posted on Tuesday, February 13th, 2007 at 9:07 am and is filed under Entrepreneurship 101. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.