Business plans are a waste of time?
I recently attended a conference of local entrepreneurship, with a number of academics and other business acquaintances. I find it interesting that two concurrent sessions offered conflicting views on business plans. One session featured a panel of successful entrepreneurs question the relevance of the real world of business plans. The second session focused on teaching students to develop quickly and properly the business plans.
I was intrigued by the discussion group for the session I attended. None of the contractors on the panel had already written a business plan, at least to start a business, but all have had great success. The revelation that does not use written plans is not surprising, most contractors do not. One of the reasons cited by the resignation of the group of a formal business plan is the natural tendency of contractors to hold a business plan he wrote because the investment of time and effort. The reality, they say, is that things change so much in the real world of business that the assumptions underlying a business plan often must be modified or even abandoned for the company the flexibility needed to survive. In addition, employers are convinced that a good plan will not be a bad idea to work a great idea, and probably will not be affected by a poorly written plan or no plan. Another concept discussed at the meeting was that the contractor is really selling venture capital or angel investor is an entrepreneur. One panelist noted that "If investors believe in you, they will invest in your business." There is a consensus from the panelists was that investors seek the passion and vision beyond the idea. They must be convinced that the contractor is able to persist and make good decisions and adjustments to keep the company moving forward. As there were college instructors present, and most corporate programs require written plans, all entrepreneurs in the panel diplomatically agree that requiring a business plan as part of a course or curriculum has not been a waste of time. They agreed that the process itself can provide valuable insight.
From college entrepreneurship educator I try to give as realistic as I can reality that entrepreneurs face. He participated in the conference I realized that the student can be difficult to reconcile two seemingly contradictory points of view presented in the workshop. Of course, my students are aware of the statistics, most entrepreneurs will operate without a written plan. Try to convince them otherwise would be misleading. If the Board was correct, why bother with a business plan at all? I believe the answer lies in recent nugget offered by the group of entrepreneurs, is a process that is most favorable.
The planning process does not begin with a business plan. In fact, it's a mistake to write the plan too early. Feasibility analysis must be performed before a written plan, so that the main assumptions on the level under investigation. The study was conducted as part of the feasibility analysis may also lead to an entrepreneur to better understand their business. For example, if a focus group is used to better understand the target market, new knowledge can be obtained which could lead to the development of more competitive business model. The results of a feasibility study and articulation of the compelling business model and competitive are the most important parts of the business plan. Together with the analysis of cash flows of these problems can be critical for the acquisition of resources needed to launch a new venture.
The second point I want to give my students the importance of the management plan depends on the business. Retail high capital requirements, inventory, payroll, etc. is completely different from that of the new joint venture, the technology industry, which is rapidly changing and evolving. The business is similar to, for example, is much less need for a formal business plan, as the owner of a new sporting goods store. In addition, the loan amount of capital required to start the business impact of the need for a formal plan. Capital investors typically want to check out, at least in some parts of the official plan as part of due diligence.
I think employers have a valid argument regarding the tendency of business owners become too attached to an official plan. A critical moment occurs when the business is started and the contractor begins to receive feedback from real customers. Decisions taken at that time can make the difference between success and failure of the company. If the contractor with the plan's assumptions, or minor adjustments or major to do? The contractor should take into account that the company is not on autopilot is not due to a business plan is brilliant in its place. You can make adjustments depending on conditions. The group was not wrong when we question the need for a formal business plan but the planning process is independent of the plan. A business plan, if necessary or not, will allow the contractor to better articulate their vision of what can make a written plan useful.