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The Business Plan 

Fact: Should you be seeking outside financing for your startup or early stage business, a business plan may be necessary. (We don't make up the rules, we just learn them.)

Fact: Nowhere else is the Golden Rule: "They who have the gold, rule." more prevalent than in the financial community investing or lending to new entrepreneurs.

Fact:
Business plans are often (and not always) requested by banks, venture capitalists, angel investors, seed fund and grant administrators, etc. Fair enough, it's their money.

Fact: However, "business plan building" is a big business, as demonstrated by the thousands of books, tapes, videos,  courses and countless hours of business plan advisory services sold today.

Fact: Even your friendly, neighborhood, tax-subsidized, small business development center will be happy to sell you numerous courses on business plans, with such enticing titles as "Roadmap to Success" or "How to get a Loan."

Fact: The requirement for the business plan has not been forwarded by those with the deep pockets, but propagated by academic institutions filled with those who can't "do" so they "teach" and preached by business planning consultants who make their money by convincing you to buy something regarding a business plan.

Fact: Read any of the numerous online discussion blogs regarding the necessity of a business plan to discover the only dedicated advocates are mid-level corporate managers (who have never owned a business and never will) and those consultants who sell business planning tools, advice, books, or workshops.

Additional facts to know about business plans:

  1. Even the most perfect plan ever written will not necessarily get funded.
  2. Even the most perfectly written business plan perfectly executed will not necessarily produce a successful business.
  3. The struggle in composing the business plan has caused more than one potentially great entrepreneur to never launch a wonderful idea.
  4. There are literally hundreds of thousands of highly successful businesses in operation today that were started without a college degree, deep pockets or a business plan. For instance, with over 7,500 profitable businesses in business over 5 years surveyed, 78% reported they did not start with a business plan and did not have a business plan. (You are invited to confirm this is your own community.)
  5. The next time you're hob-knobbing with Bill Gates, Donald Trump, Mark Zuckerberg, Ralph Lauren, Michael Dell, the late: Mary Kay Ash, Steve Jobs, Sam Walton, Henry Ford or Walt Disney (just to name a few), ask about their business plan? (They never had one.)
  6. Remember the huge "dot com" implosion? Every one of those busted companies had a business plan that was read in detail by the investors and 99.6% failed.
  7. Here's something you may find of interest: a Houston Chronicle article Saturday, November 5, 2011 - purva.patel@chron.com about the 20 year old who just raised 1 million dollars: "We didn't have an executive summary or a business plan . . . just two people and a story and a demo."
  8. "Great businesses don't start with a plan." says Anthony K. Tjan, CEO, Managing Partner and Founder of the venture capital firm Cue Ball, Vice Chairman of the advisory firm Parthenon. Further, he says " . . . of the entrepreneurs we surveyed who had a successful exit (an IPO or sale to another firm), about 70% did NOT start with a business plan" and  "Early stage entrepreneurs don't need a business plan . . ." says Lonnie Sciambi - The Entrepreneur's Yoda and the discussion: "Business Plans - Necessary or Just a Bunch of BS?"  "Business Plans are Dead" says Ben Gartman, Executive Leadership Forum. "Business Plans Are An Historical Artifact"  says Brad Feld, Managing Director, Foundry Group Venture Capital.
  9. Funding start-ups through business plan competitions has become very popular. Yet, the sponsors, most often a college, university or 501 (c)(3) charity organization, only report the amount of funding awarded each year and never the success or failure rate of the previous winners because the venture capital industry reports " . . .start-ups funded through business plan competitions are less successful than those funded with other selection processes . . ."
  10. Now, if your mind is set on a business plan or you think you have to have one for funding, we'll be delighted to guide you though it. Just be aware that there is an alternative that is gaining wide acceptance as a replacement: "The Business Overview" and we'll be equally delighted to take you through that, too.

    The way it is: "Those who can, do." "Those who can't, teach." "Those who can't teach, teach teachers." "Those who can't teach teachers, teach business plans."

    The way it should be: "Those who can, do and teach entrepreneurship."

"I started my business in the late 70's with a direct SBA loan and a SCORE Counselor. My Counselor (God rest his soul) was a former business owner who took his business from start-up to significant revenue - with no business plan - before selling it and entering "retirement."  Among his words to me were: "Stay away from people who have no hands-on business ownership experience, especially those who preach you 'must' have a business plan to be successful."
C. Dean Kring

The best place to start generating money is a triple barreled approach with a marketing strategy, personal selling skills and business networking. And, just so you know, all funding sources will take a much closer look at you and your business when you've actually starting making sales. Further, it would be great to discover that you don't need outside financing because your sales are giving you all the cash you'll ever need for expansion, a comfortable living and ultimate retirement relaxation.

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There are those who will attempt to persuade you that you must know everything there is to know about electricity before you can operate a light switch. Be not surprised that these same people are from academia, government or large corporations, have absolutely no hands-on experience in starting and growing a venture, nor any comprehension of the importance or even the existence of the entrepreneurial exponent, and no capability, whatsoever, of understanding and operating at risk.Yet, they presume to be "the" experts in teaching you how to have a successful business. Their mantra is "business plan."

"The art of entrepreneurship continually befuddles the science of business administration."
C. Dean Kring

"Throughout the centuries there were men who took first steps, down new roads, armed with nothing but their own vision."
Ayn Rand


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