Writing a Business Plan: Getting Started

The first step in writing a business plan is the simplest, and predictably, it’s the one people most often get wrong. There’s a common perception, especially among entrepreneurs without formal training in business, that a business plan is somehow being imposed on you by outside forces – banks, or venture capitalists, or private investors, or grant makers, or even the Small Business Administration are making you write this document instead of spending the time running your business. Even people who are still in the planning stages of a new business (and therefore have no business to run) can fall into this thought pattern, seeing the planning process as a kind of initiation or hazing being inflicted upon them for no good reason. When I teach this subject, I usually start by pointing out that a business plan has both an internal and an external function – and both of them are important…

The external function gets most of the ink – you will be showing this plan to people with money in the hopes that one or more of them will give you some. Unless you can explain why your business will succeed, and generally why you would be a better choice than a number of other entrepreneurial projects, you are not likely to get the funding you need. There’s a natural tendency to resent this sort of demand that you prove yourself, but when you look at this from the other side of the desk, it’s a completely reasonable question. Consider if it was your money; wouldn’t you want some indication that the people you were going to invest in knew what they were doing? For that matter, how would you rank a given project against others you could invest in (or, for that matter, against investing in the stock market or a treasury bond) if you didn’t know anything about it?

The internal function of the plan isn’t as flashy, but it’s actually more important: working out what you actually intend to do, and why. Most entrepreneurial ventures begin with an idea, or sometimes just a mental picture, of a product or service that you could provide. This may not include details of where you would base your operations, or how you would market your product or service; it probably doesn’t include details like licenses, permits, bank accounts or tax issues, and it almost certainly doesn’t include supply, human resources or vendor relations functions. And unless you’re a very superior business planner, it won’t include a detailed budget or timeline. Writing these things down won’t make them work, any more than creating a budget will somehow cause money to appear in your bank account, but you can’t explain them to anyone else until you’ve worked them out for yourself – and this is where you get started…

The first step in writing a business plan is the decision to do it – to actually invest the time and effort that you will need to create both the document and the business template it represents. Because you’re not writing it for anyone else, or for any extraneous purpose; the plans you are making are the ones you intend to build on, the timeline is the one you are going to follow in order to get everything done on time, and the budget is what you’re really going to spend for the things you’re going to purchase. The difference between being an entrepreneur with a new business concept in development and a dilettante who will always talk a good game but never amount to more than a poseur is always going to be the willingness to do the things that need to be done – and this is the first one. Before you decide to invest your life, your fortune, or your sacred honor in this new venture, you’ve got to ask yourself the first question an entrepreneur faces: do I want this badly enough?

Well? Do you?