The recent consensus from investors and experts on business plans is…don’t do them. Most often I’m hearing that founders have not written a business plan document. They’ve prepared executive summaries, powerpoint pitches and filled out forms at online pitch sites. But they haven’t written a text-based document. Their eyes say “You’ve got to be kidding,” when I suggest they need one to get funding from us. Their body language screams “I already know exactly what I’m doing…what value can some outsider add?” when I tell them I want to bring on a consultant to help them write one. “No way,” they say. “Way,” I say.
I know the entrepreneur believes that writing a plan feels like busy-work. I know I sound like a government bureaucrat when I ask for a plan (most ask me for examples or templates they can use). I know that you didn’t pay attention in freshman english in college and I know you have a Ph.D. in Physics from SuperSchool. But the act of writing, reading and editing a business plan does one critical thing better than the summary, powerpoint or online site forms: it illuminates your shortcomings. And let’s face it Mr. Entrepreneur…that’s the real reason you don’t want to write, isn’t it?
Putting details in black and white for others to scrutinize forces you to confront the fact that you may not really know all that needs to be done next. Writing the plan will force you to think 3 moves ahead, when you may not have thought any moves ahead. It opens up to debate your thinly-thought-through theories. Because of this, I’ll say it is a good idea to write a text-based business plan. If you don’t believe me, you’ll see that Guy Kawasaki agrees in this article!
Writing a business plan is also better at requiring the entrepreneur to identify and confront risks that exist in the business. When creating a powerpoint, the creator is spending too much time in the act of being artistic. Deciding which color themes to use, and what style bullets and…just shoot me now…which animation and sound effects to use! All this distracts the founder from the hard work. The hard work is confronting the risk that exists with any venture. It is much easier to gloss over the reality of risk than to choose pithy clip art. Every entrepreneur I’ve met agrees that “sending” a powerpoint is less adequate than “presenting” a powerpoint. Obviously. The powerpoint leaves a great deal to the imagination…20 pages of text leaves far less to imagine.
By painstakingly choosing words to type on the paper, and putting the words in proper order to form complete sentences and thoughts, one is forced to think. By being forced to think, and having the words remain in place on the page for others to consider, the entrepreneur faces his or her own inner fears. And just like when you were a toddler, forced to face the fears of monsters under the bed, you’re better served today by braving them. One of the most important jobs I do for my clients at TechVentures is to listen to them. They’ll walk into my doorway and talk out loud about some business problem, or looming business problem. Most often I do a lot of nodding and “mmm-hmmming”. I swear that sometimes I say “How does that make you feel?” Sometimes I argue with their premise. But all of it is meant to help them confront the shortcomings of their plans. And so it is with the business plan.
If you are thinking about launching a new venture, and especially a potentially high-growth technology venture, you should write a business plan. From scratch. Use an outline but not a “fill in the blanks” plan. The goal is not to get it done…the goal is to do it. I’ve put a sample of an outline here: Writing a Business Plan. Think a few steps ahead. Read what you’ve written. Ask others to read what you’ve written. Fear is not an option. Remember the words of former Google CEO and current Chairman Eric Schmidt at the 2009 University of Pennsylvania Commencement address: “If you forgo your plan, you also have to forgo fear.”