The Business Plan

Another post coming!
This time it starts to make quite a number, and we are little by little getting to the last one...


But for now let us focus on the Businnes Plan, the "must-do" or any entrepreneur!
"Must do"? Mmm... Maybe not...


First I should start by saying that I had not studied Business Administration before, so even if I had heard of a Business Plan 1/ I've never done one, 2/ I didn't know (until know) that it was of such importance to investors' and many people's eyes.
However my observations are that on this subject/idea, like many others I've already witnessed, we are in front of an interesting phenomenon: it seems the literature and the scholars are drawing back more and more regarding the "rational only" perspective that was used to study human behavior.
Practices purely rational are put into question toward a more human perspective (including emotions, intuition, etc...).
In the case of Business Plans, this phenomenon is shown through the necessity of writing such a document that is put into question (Honig & Karlsson 2004), meaning that an entrepreneur's rules of thumb, feelings and else are more and more acknowledged as (efficient) ways of doing business.

These doubts come from different facts. One of them is for example that no linked has been found between companies writing their Business Plan and an increase of their profit: they are doing just as fine (or bad) are those writing nothing!
I was quite surprised to learn that, since a Business Plan appeared to me as part of the strategy, and planning and strategy are of the essence in a company...
It is also quite surprising (but a logical conclusion nevertheless, considering what I've just explained) that assistance agencies become actually irrelevant in bringing more profit...

Therefore the question becomes: what is the use of a Business Plan?
Well, actually it might be wise not to judge hastily that there is none, because it seems it is not the case.
From the entrepreneurs point of view for example, they see it as a way of answering some expectations. It means that a Business Plan is less a useful tool than something asked "because one has to".
By the way, I'd like to link this perspective with the entrepreneurial dilemma we saw earlier, namely "fitting in while standing out": we have here the perfect example of something that an entrepreneur has to do to "fit in", while presenting an idea that "stands out".

It seems also that the Business Plan is a way to force somebody to think through his idea, in detail: it forces a reflexion on the project which (even if we can't call it a "strategy") gives a better understanding, and that is useful for sure.

At last I will conclude by what seems actually the most useful role of a Business Plan (and this role is most of the time acknowledged, even by those against Business Plan): it is a communication tool. Thanks to that document, one will avoid having to explain his whole idea every time somebody new shows up, one can easily send a copy to potential investors, or ask new employees to read it to understand where they end up.

After having followed the lecture today, I even have an idea of who might find a Business Plan useful and who might not (it is just a guess).
NB: I assume the communication role of that document is useful for anybody, therefore I do not count that point (meaning I simply tell who might find the other characteristics of a Business Plan useful, and who might not).

- According to me, someone starting a business because he/she recognized an opportunity (not starting from an idea he/she had before) will want to write a Business Plan because it is a way to define clearly a focus (and possibly check it again in the future to keep this focus), a way to clarify the opportunity, even a way to keep the motivation, etc...

- On the other hand, someone starting a business because he/she had an idea, a dream, or anything else coming from the inside, won't need that document because there is no possible lack of motivation, focus, are unclear idea.


Well, I think that's it for the Business Plan!

Bye!

David

Honig, B. & Karlsson, T. (2004). Institutional forces and the written business plan, Journal of Management, 30(1), 29-48