The plan to make a Business Plan

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Ever tried to write a business plan? Do you even know how to do one? Properly? I don’t, and that’s way I’m currently learning.

There are many ways to do a business plan, many theories and even more experts.

I recently came across an article from Inc.com that debates the idea of having one. They called in two experts, each defending one side. David F. McShea, a partner at the law firm Perkins Coie, says “Absolutely yes!” and Will Hsu, co-founder of the LA-based start-up accelerator Mucker Lab, says “Absolutely no!”

It’s interesting seeing too opposite answers make so much sense in their own way.

McShea believes that writing a business plan helps us really stop and think about our ideas, giving us a chance to change and strengthen our business concept. It’s better to do this on paper, then later when the company is already established.

In addition, there is knowledge to be gained when writing a business plan and the research that comes with it. This gives us the preparation to make better and wiser business decisions, as well as a clearer vision of where and how the business can grow. Plus, very few potential investors will even look at a business if it has no business plan.

On the other hand, Hsu believes that the time we send writing the business plan, is time that would be better spent figuring out the product market fit risk and understanding the costumer and their needs.

Moreover, the biggest advantage one can have without a business plan is faster time to market. This gives us the chance to collect real data inherent to our business that no research and analysis would potentially gather. “The business plan-centric approach to company building forces an entrepreneur to focus on strategies and plans as the first step of the process. By not having a business plan entrepreneurs will be forced to focus on their customers first and foremost.”
As for potential investors, Hsu says that a short 10-15 page presentation summarizing the business opportunity is good enough.

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McShea’s advice:

•        Write a business plan clear and simple.
•        Use concrete words, stay away from jargon.

o   What the product/ service is

o   How it creates value

o   Who will use it

o   What is the market opportunity

•        A business plan is not static. Strategies evolve as circumstances change.
•        The plan will help guide you to where you want to go.

Hsu’s advice:

•        Don’t create a business plan.
•        Purchase a couple of whiteboards and write:

o   Target customer

o   Pricing

o   Product

o   Value proposition

o   Promotional channels

o   Positioning

o   Competition

•        Rank the reasons the business could fail.
•        Start building and selling the product to presumed costumers.
•        Use this costumer development opportunity to gather data on high-risk factors.
•        Go back to the whiteboard and adjust strategies and plans.
•        As the business evolves, check off the risks that have been proven or disproven.

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I, personally, intend on finishing my business plan, although I agree with some thing Hsu says. However, it is virtually impossible and business suicide to jump into a market we no know little about. The business plan gives us that lifeline, allowing us to make mistakes on paper and resolving them before they happen.

Also, I intent on applying some tips from one of the world’s richest businessman, Carlos Slim. They are:

• Create a simple organizational structure with minimal hierarchies; provide personal development and in-house training for executives.
• Don’t be a big fish in a small pond. Don’t invest in non-productive assets.
• Clear objectives and the right tools will lead you through all challenges.
• Reinvest profits in the company. Money that leaves the company evaporates.
• True corporate creativity can be helpful to both business and society.
• Firm and patient optimism always yields rewards.
• Know how to work hard, and use the right tools.
• Leave with nothing. We can only do things while we are alive. Businessmen are creators of the wealth that they temporarily manage.

I’ll leave you with two links to 20 business tips from Robert Herjavec and Barbara Corcoran, two famous investors from one of my favorite shows, Shark Tank.