Is the Traditional Business Plan necessary?

NVArchitectNVArchitect Posts: 12subscriber
edited May 2010 in Business Planning





One of the first things that a new venture planner is told is that they need a business plan. A quick look at what this involves is usually enough for most of them to either give up on the idea or just go and do it anyway. Those that take the second option are not alone as a study of the Fortune500 companies found. In this study, 60% of these high growth ventures did not prepare a traditional plan and of those that did, more than half completely changed their plan anyway.






So why the big push to write a traditional business plan? Well, the answer is simply that Business Plan writing has become a huge business in its own right. Entrepreneurial educators the world over have built courses on the premise that we need one and there is no shortage of books and consultants prepared to take our money in order to deliver one.
It has also been cynically suggested that you are told to go and prepare a business plan so that the investor or bank need not tell you NO to your face. They know the energy sapping task they are asking you to do and they will not see you again for 6 months ... if ever.






Now planning for a new venture is essential but the traditional business plan is not. What is needed is a planning tool that reflects the way entrepreneurs create and develop their opportunities and not a planning tool that is an adaptation of large corporations.





 





See my article on the traditional business plan where I offer some suggestions on what should replace the Traditional Business Plan. Business Planning for Entrepreneurs





NVArchitect9/1/2008 8:32 AM

Comments

  • StartUpSmartStartUpSmart Posts: 0subscriber
    Hi,
     
    If by "traditional" you mean a 70-page leather bound, gold embossed document that never gets read, and if it does it reads like an encyclopedia, then I would absolutely agree with you. However, if you mean a plan that ensures the entrepreneur defines his/her target customer, clarifies the customer`s problem, articulates a solution to the problem, highlights the credibility of the mgmt team, and shows how they will differentiate themselves from the competition ,then I couldn`t disagree more.
     
    I see from reading your link that you provide some interesting information about streamlining and making a plan more flexible in today`s environment. The ideas seem sound and straighforward.
     
    My unsolicited feedback to your post is to be careful about linking the term "successful ventures" with Fortune 500 companies. These companies are measured on their ability to deliver top line results. We have watched many companies enter into this elite category only to get caught on a slippery slope of mediocrity because they didn`t have a sensible and sustainable business model. For example, AOL and Yahoo. Now, at the same time, I would be fairly certain that both AOL and Yahoo had a business plan. Perhaps their plans followed the "traditional" format and failed to address the rapid change of their enviroments as you suggest.
     
  • infiniqueinfinique Posts: 0subscriber Member
    Typically banks would want to focus on funding businesses with a down to earth brick and mortar structure rather than businesses with no real turnover profit structure and one that cannot see a return of investment within 18-24 months.
  • taat_pringisttaat_pringist Posts: 0subscriber
    Taking your question rationally, there seems to be no hard evidences that a formal business plan would help to influence on economic sucess. Did B. Gates had a business plan? Or Larry, or Warner? Business plan, I mean a formalized paper, is needed as a "ticket" to claim a grant financing, a bank loan, a VC investment.. However, every entrepreneurs has a business plan in his/her head, always.
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