Business Plan

It’s important to note that a business plan is a point of departure for both future business owners and investors. Investors, particularly can bring knowledge and contacts to the venture; which in turn adds value to the potential opportunity. Although a business plan is vital in developing a new business; experts in venture creation argue that; (1) due to technological changes business plans are obsolete at the printer, (2) business plans are a work in progress. As entrepreneurs, investors and the management team learn more and more about an opportunity, a business plan must be adjusted to allow for the most success. In other words, a business plan is not the business, it is a guide to help focus the efforts and attention of entrepreneurs. Therefore, although you eliminate potential threats by drafting a business plan, it by no means guarantees automatic business success.

There are three business plan pitfalls that trap many entrepreneurs. (1) First, many entrepreneurs present what is called a “dehydrated business plan”. This is a plan that is usually 3 to 11 pages long. Entrepreneurs prefer it, because it can be prepared in a few hours while also allowing for time to run a business operation. The “dehydrated” plan is dangerous, however, when seeking money from venture capitalists or outside lenders. It can fall short on expectations, and result in embarrassment for the entrepreneur. (2) Second, some entrepreneurs seeks outsiders to write a business plan, allowing the team to use saved time to start the business. The problem with seeking this type of outside help is that it increases the probability of missed opportunities or corrections. By failing to examine threats, weaknesses, and strategies an entrepreneur increases the odds of his venture failing. Also investors tend to correlate an entrepreneur’s ability to communicate a vision with the ability to successfully realize it. The third (3) mistake committed is that in the process of selling their ideas to potential investors, many entrepreneurs forget to use the opportunity to query prospective investors. Therefore, by failing to screen the investors, many entrepreneurs fail to attract the investors who can add the most value to their company. In addition, by failing to question investors, entrepreneurs fail to present themselves as good listeners and genuine founders. This results in being perceived by investors as argumentative and defensive.

In planning for a new venture many entrepreneurs establish action steps to write a business plan. First they segment information by section and set deadlines, second they create an overall schedule of deadlines and step-by-step actions. Third, they create what is known as an action calendar. This allows them to match goals and tasks with physical dates. Finally they do the work and write the plan. It is estimated that on average a business plan for a startup can take 180-310 hours.