Never Ending Thoughts…

You’d find lot of material if you search for articles on the Web related to writing business plans. There are some really good templates available for free! A very good business plan template can be downloaded from Microsoft’s website: http://office.microsoft.com/en-us/templates/TC010175201033.aspx. But does a good template really help in writing a great business plan? To find answer we started discussion on this topic at various forums such as LinkedIn and got some really good answers. In this article we have tried to capture all those answers and provide you, the reader, with some insight about how smart entrepreneurs are solving this problem.

Smart entrepreneurs don’t write business plans! Instead, they spend more time on product development, marketing and sales efforts. The reason is simple. It takes an awful lot time to write a business plan, let alone a “great business plan”. Although the entrepreneur has a lot to contribute (such as clearly defining the goals and objectives) in the whole process, most of the other modules (such as sales projections and estimates) need to be backed with solid marketing research and factual numbers; something that can only be done by marketing research companies.

One more thing that smart entrepreneurs know is that no matter how “solid” your business plan might look like, it’s of no value to VCs. Until you have some customers and a team that is well-respected in their field of business backing the product or idea, no VC would be willing to fund. Think of it from VC’s perspective. Why would I invest in your product when I don’t know if it’s actually going to give me a good return on my investment? Think of it like investing in stocks; would you buy $10 million worth of stocks of a company just because the CEO came to you personally and said “this product is going to rock!” and on top of that you have no history of the company? Smart entrepreneurs know this fact and concentrate more on building strong relationships with the first set of customers and build strong teams.

The last thing that smart entrepreneurs do is keeping business plan short and simple. Many great ideas have the risk of creating snow ball effect in the minds of people; especially creative people. And this blows the original idea (and hence the business plan) often by ten times if not more. It just becomes far too fancy and complicated “idea” for any VC to venture into. Smart entrepreneurs keep the idea simple and know where to draw the line between what can and what should be done.

Having said that, many experienced entrepreneurs and VCs will tell you to still go ahead and write a business plan yourself and we totally agree with that. Writing your business plan yourself will help you answer lot of questions that you’ll need to answer anyway during the process of writing the actual business plan. Using a template that matches with your Industry and Market is a good way to start. A template will help you formalize your thought process not only around how to get funding for your idea but also to better understand your product! But, in no respect, this – your personal business plan – would be close to what you’d share with VCs. This – your personal business plan – would be something that will be a “work in progress”; more like a “draft” that will help you guide the people who will in turn help you write your business plan more professionally.