A Process, Not Just a Document

Entrepreneurs sometimes miss the whole point of creating a Business Plan. They believe it is simply a document that is put together (sometimes hurriedly) to satisfy the needs of individuals outside the company, such as investors or lenders. They might express it this way: "The Venture Capitalist says I need a Business Plan, so I guess I'll have to write one." This is usually accompanied by a weary sigh.

Actually, a well thought business plan primarily benefits the management team inside the company. It is their vision of what the company will look like 2 or 3 years down the line when it is successful, and it is a blueprint containing the steps or milestones that must be achieved to reach their long-term objective, whatever that might be. It could be a target such as $50 million in revenues within 3 years. Or it could be a subjective goal such as being the dominant player in their market space within 5 years.

But the point is, planning is a process, not just a document.

On occasion and entrepreneur will contact us and say, "I need somebody to write me a Business Plan." We respond by saying that we assist our clients with preparing Plans, but we don't write them by ourselves, in isolation. Our philosophy is that the management team should be involved in the preparation of the Plan, including the financial projections. And they need to know the Plan backwards and forwards before they meet with investors, so they can answer the tough questions that will inevitably be asked.

And the Business Plan is not just a tool for raising money. All companies need to have a rigorous planning process and update their plan at least annually, whether they are out looking for capital or not. Why? Because better planning almost always leads to better results.