Forget The Classic Business Plan Unless You Are In School

Writing a business plan is most often considered pure drudgery. Most think it is an act of futility as when the first bullet is shot, the plan goes into the fire. There are so many variables. An in-depth business plan, while uniquely interesting to the author, has little relevance to what will really happen in the business. Simply stated, there are far too many variables and a carefully written tome may look great in business school, but it is fairly useless in the real world. Who ever really knows what will occur, or when? What we do know is that it will all usually take longer than projected and cost more than expected. Sales will ramp up slower than anticipated and issues galore will appear, issues you had no idea might occur, but that happen all the time anyway.

Entrepreneurship means having the ability to navigate the unknown. A business plan cannot predict or project these realities. I might add that Steve Jobs, Bill Gates and Michael Dell did not have formal business plans when they launched and they did pretty well. In fact, a recent study by Bentley University disclosed that after reviewing a large number of start-ups, there was no advantage for those who wrote a business plan over those who did not. Failure and success rates were the same. How many times have you heard it said that venture capitalists read the executive summary and that’s it? If it is interesting, a discussion occurs. There are no written tests, no one ever reads the tome, ever.

What you do need is an estimated and projected cash flow with reasonable assumptions that are believable. Things may not happen as projected but at least this establishes a business model to work from. This works in both evaluating the potential and as a working tool for supporting your plan as assumptions convert to reality as change happens and reality sets in. Five pages at the most, two or three preferably, plus a cash flow and you are ready to hit the trails. Most important is how are you going to create revenue–that needs the most attention. This works.

Of course, you must be able to discuss and evaluate everything that a business plan would include, but the tome is generally unnecessary unless it is for a grad school course. Use it in that case to get the A. For the real world, other issues are more important. A well done executive summary, revenue creation, and a cash flow–in three to five pages–is all you need.