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Don't Burn That Plan

Would you go to your wedding without planning for it?  Would you just show up one day at the church and hope the minister was there? Or just assume that friends and family would be in the pews without contacting them? Or hope that the photographer would be ready without talking to any beforehand? Or assume that the baker and caterer would have the cake and food ready without consulting them? Of course not.  Unless you were MWI (married while intoxicated) in Las Vegas.

Would you insure your financial security without developing a financial plan? Would you bypass the advice of experts and people with experience, like a certified financial planner? Or ignore considering your short and long term objectives? Or distain market data and trends? Or fail to create a balanced portfolio? Would you just put your money under the mattress and then pray to hit the lottery?  Probably not.

Yet there are some in the entrepreneurship community who tell entrepreneurs that planning is useless, that it is a waste of time and energy to conduct research and consider short-term objectives and long-term goals, that entrepreneurs should simply burn their business plans. In my experience, this advice is at best misguided and at worst foolhardy.

A number of years ago, I had the great good fortune to work with Peter Drucker, perhaps the leading management thinker of the 20th century and author of the classic book Entrepreneurship and Innovation.  He identified five major questions that every entrepreneur should consider: "What is your mission? Who is your customer? What does your customer value? What results do you seek? What is your plan?" Essentially, he was asking entrepreneurs to think critically.  If an entrepreneur can't address each of these questions, their chances of success decline significantly. 

I have always found the research and writing of a business plan to be an experiential exercise in critical thinking, which is what every educator in every discipline should be working to develop in every one of their students. An effective plan demonstrates whether the data and trends in one's market (an entrepreneur's potential buyers) and one's industry  (other sellers against whom one competes) are attractive areas in which to build a venture.  The convincing plan clearly shows a continuing interaction, or collision, with the customer, delineates who, among all potential buyers, will actually buy one's product or service, and describes both the real needs and concerns of one's customers as well as the compelling benefits of one's product or service. A good plan identifies the competitive advantage of one's product or service that allows a new enterprise to flourish. 

In essence a winning plan addresses two critical issues that every potential investor or employee wants to know: Is this concept a genuine opportunity? Can this entrepreneur and team pull this off?

In entrepreneurship education today, there is a wide range of experiential teaching and learning techniques. Writing and presenting the business plan is one of them. Others include techniques like interviewing an entrepreneur, learning how to pitch an idea, internships in incubators, assisting with due diligence of ventures, iterative product development, an opportunity assessment, case studies of new enterprises, gaming and simulations, and exercises in creativity and innovation. In other words, in the discipline of entrepreneurship, entrepreneurship educators have a lot of experiential arrows in their teaching quivers.  Rather than disparage an experiential learning opportunity, people who care about helping entrepreneurs succeed should encourage techniques that require critical thinking and build know-how in the entrepreneur, like writing and presenting a business plan.

Does this mean that a plan is cast in stone never to be modified as events change or the unexpected occurs?  Of course not. In fact, a good plan anticipates potential changes, considers risk factors and in the process demonstrates the ability of the entrepreneur and their team to adapt and be flexible. Sometimes Plan A becomes Plan B.  But the investigation, analysis and evaluation that goes into Plan A actually helps shape Plan B. That is in the nature of all good planning.

In war, there is an old adage that every plan changes once one encounters the enemy. But the critical point is that every mission starts with a plan.  No commander would go into battle without a plan.  I have a dear friend who served in the Air Force. He made an astute observation to me about planning. He said, "In the military, you were never blamed if you didn't have a plan for something that no one could have imagined. But you could never be forgiven if you didn't have a plan for an event that could be imagined but seemed very unlikely."

His observation was confirmed in the movie, Zero Dark Thirty, about the raid that killed Bin Laden.  The Seal force had prepared a scaled version of the compound, and then built a life-sized complex to practice. They gathered as much information as possible about the number of people they might encounter, the terrain in which they would fight, and the layout of the interior.  They anticipated what might go wrong (like a helicopter going down) and developed contingency plans.  And then they implemented their plan.

In my career, I have written business plans, read and critiqued hundreds, and taught business planning.  When done well, a business plan serves several purposes. It is a sanity check for the entrepreneur and the team to help them determined for themselves whether the venture is viable.  It is an opportunity assessment that demonstrates critical thinking and actually invites constructive feedback and refinement. It is a fundraising document for potential backers of the venture, like private investors, venture capitalists and bankers, almost all of whom want to see a plan. It is a recruiting device to bring in talent. It is a strategic tool to chart direction.  It is an operations guide to start and develop the enterprise.

So, don't burn your business plan. Make the most of it.

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