Last week this blog discussed the changing nature of business plans (a la Tim Berry) and whether business plan competitions truly teach the students anything about really using the business plan as a tool.
Belmont Prof and blogger Jeff Cornwall investigates focus on business plans in a great post/reaction to BusinessWeek’s recent entrepreneurship special issue. I had not even seen the issue, but judging from Cornwall’s write up, I may not have missed much. From Cornwall’s post,
It is as if we are telling aspiring entrepreneurs that once they unlock the secrets of the business plan, the world of entrepreneurial wealth will come pouring out at them.
Sorry, but this is just not true.
On the other hand, there is now a debate raging as to whether we should even teach entrepreneurs about business plans. a growing number of experts now fundamentally question whether business plans even matter. It seems that some data suggests that business plans have no impact on the overall success of entrepreneurial ventures.
All of this — and I mean both sides of this debate — is missing the point.
Are business plans all you need to know to unlock the door to success? Of course not.
Is writing a business plan a complete waste of time? Also, not true.
So why do we teach about business plans? It is because they are a way to help organize what can be a complex and overwhelming array of issues. It is because it forces us to integrate our marketing plans, or operating plans and our financial plans into one, coherent story. It is because we need to put it all down on paper to make sure that we have thought of all of the important stuff that goes into a successful start-up. It is because business plans have become the standard for communicating about a business to those with money.
I have come to believe that unless you are really going out to raise serious funds from institutional/professional new venture investors, a formal business plan is unnecessary. Which underscores Cornwall’s questions on why so much focus is placed on writing business plans?