En Route to Saenthood:
#22 About Those Rumors of the Business Plan’s Death…
This series is about what I’m learning, observing and experiencing while building our startup Saent (pronounce “Saint”). The good, the bad and especially the ugly, each time in under 500 words.
Thank God we startup founders are no longer expected to go through the ordeal of writing a 40+ page business plan. Imagine how much time it would take to put such a document together! Any self-respecting modern entrepreneur surely has more important things to do.
How did we escape this dreadful fate?
“’No venture capitalist actually asked us for a business plan,’ HubSpot Chief Executive and founder Brian Halligan said last week at the Puerto Rico Venture Forum.
Halligan believes ‘it’s a fool’s errand’ for start-up founders to create a business plan. He knows a lot about raising capital, serving as a venture partner at Longworth Ventures before his current position.
‘When I was a venture capitalist investing in companies, I never actually read a business plan, so don’t even waste your time with a business plan,’ he said.”
- from Should Start-Up Founders Forget About Business Plans?
If the VCs don’t read them anymore, why would you make one? As Victor Balasa writes on Hongkiat:
“Business plans are in place to give investors a sense of security.”
A matter of time?
I’m pretty sure there’s another reason most entrepreneurs avoid writing business plans, though: time. Writing such a comprehensive document is a massive undertaking and requires hours of uninterrupted deep thinking. These days, in our always-on, information overloaded business culture, finding that kind of time seems nearly impossible.
Even though I felt the same time crunch that every entrepreneur does, I wrote one for Saent. Initially not out of free will, I admit. As we were preparing for a round of funding, our first investor, visionary Dutch businessman Jan Schouten, urged me to write a real business plan.
At first I was reluctant and intended to create a ten-page document. But as I got the hang of it, the words started flowing and the pages kept on coming. It took about a month of early morning writing sessions, but we ended up with a 42-page document, capturing the essence and long-term future of Saent.
Destined to wither away
Business plan-haters might argue the all that work will soon be outdated or worse, never be read at all. But they miss the point I’ve learned while slaving away at it: the most important reason to write such a document is not for a VC or anyone else, but for yourself and your team.
Going through the month-long exercise forced me think through problems and tactics I hadn’t considered before. It’s much harder to hide vagueness and nonsense on a piece of paper than when you merely hold a half-formed idea in your own head. We’ve learned a lot about ourselves and refined our long-term plans. It also helps everyone on the team understand where we’re going and we’ve improved our product proposition.
My advice to you? Discard the business plan at your own peril.
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