got your business plan? so what

[daveflintstone]

This article captures my thoughts exactly. Well worth the read, especially if you are just starting out on this journey.

[MarkR]

M. Dell borrowed $300k from his family. Jobs and Wozniak got $270k in funding and business guidance from one guy, Mike Markkula, whom I believe they already knew. Bill Gates and Paul Allen basically started their company from their own programming skills, although in the case of Gates his father had been a quite successful attorney in Seattle and would have had ample monetary support within the family.

If you have $500k of your own money to start up a craft distillery without having gone through the effort of writing a business plan, then I would suggest you give it instead to a good charity, for your probability of failure is going to be very high, and certainly their are more needy people in the world then Kothe Distilling.

The effort required in creating a business plan is what really counts here, although no professional investor would consider a substantial input of money without a very good understanding of the key items contained within a good business plan. If you can't figure out those items, and clearly state them in writing, who will have confidence that you can run a complex business in a highly regulated industry? And if you don't want to go to that effort, are you really capable of spending 12hrs/day, 350 days a year in starting up a new distillery?

Dell, Jobs and Gates are each amazing examples to be sure, but they are very rare examples. For each of these guys, ten fail at businesses they are just as passionate about. Do the planning up front, have it down in writing, do you homework in identifying and mitigating risks. Then go out an make some people happy with what amazing spirits you can create.

[grehorst]

The ex-banker/author only saw one business plan in 10 years?!?!? No wonder banks are in the mess they are now.

I think the 'Big Plan" approach is more dog and pony show. For the last two businesses I started my banker required a short plan with projections, where my customers will come from, common sense stuff you need to think through etc... That being said, my accountant just asked if I have ever looked at my distillery plan since I created it, of course I haven't. Every year I essentially create a new mini plan that no one else ever sees. I will say of the original plan it was a good exercise and as I wrote I tweaked it a lot and had a completely different vision by the time I was done. It's an important exercise- don't underestimate it's value.

[Rum]

This article captures my thoughts exactly. Well worth the read, especially if you are just starting out on this journey.

I absolutely agree with the author. Cash flow projections are extremely important, but analyzing every possible detail of a business in a formal written plan seems a not so good use of time. One of the main keys to success in any business is flexibility. I've seen more than one example of slavishly following a business plan and turning off the creative juices that are such a large part of reason successful entrepreneurs are successful.

I've never had more than a spreadsheet for a "business plan". That doesn't mean that I didn't think through all of the important aspects of marketing, product, etc... To say that you should just donate the money to charity instead is flippant and not accurate as shown by the studies mentioned in the article.

[porter]

I agree, business plans are 99% guess work when starting from scratch.

But what it does is force you to really look at the numbers of areas you maybe hadn't even thought of.

We can make and bottle a product. But until you look at time allotment for marketing, actual cost of packaging, etc. you don't see the overall picture.

Business plans for banks are indeed worthless. If they believe what you wrote, they shouldn't be in banking.

I think the plan is simply a way to force you to look deeper at what you are getting into. And the sales projections are completely rediculous, but overall, I know if we hadn't set down and written one there are several areas which we took for granted but the plan forced us to come up with some very real numbers.

Put it on paper.....then make it work as close to that plan to start with.

[Chris Martin]

The biggest problem with business plans is that they offer pages of blah, blah, blah about the wonderfulness of the entrepreneur and the whiz-bang product followed by a few measly paragraphs about how every person in China is going to be a customer. Then pages of numbers promise huge returns but offer little more than wide-eyed guesses. The topper--if it's included--is the offer of a percentage of ownership based on an overblown estimate of the company's value.

Well, if that is the author's version of a business plan, then I agree -- don't bother.

Otherwise, my business partner and I have, over the years, written real business plans that have raised MANY times more money than Dell or Jobs etc. started with.

Yes, the Executive Summary is the killer elevator pitch. But those cash flow projections need to be backed up with realistic assumptions. That IS something that serious investors' financial advisors/attorneys/accountants do indeed look at. And there needs to be plenty of explanation/reasoning backing those assumptions.

Every sophisticated investor knows you're not going to follow the business plan to a "t", but for most businesses (like the spirits business), it is your opportunity to differentiate yourself by identifying your prospective competitors and showing where your business belongs in the mix. If you can't do that, then you probably shouldn't be in business.

[cowdery]

The absence of a business plan will no more ensure your failure than the creation of one will ensure your success. "Business plan" is really a metaphor for knowing what you need to know. If you treat the creation of a business plan like a school assignment, an empty exercise primarily for the benefit of someone else, then you won't get much out of it and it probably will be a waste of time. For many, creating a business plan is a reality check. If you can't make your idea for a business work on paper, it's unlikely that you will be able to make it work in reality either. In some way, shape, or form, you must have some idea of where you are going to guide your dedision-making. As the saying goes, if you don't know where you're going any road will take you there.

[Guest Liberty Bar - Seattle]

I could not disagree more with this article.

You know what a BP or even a Business Summary does? It shows that the person knows or DOES NOT KNOW what they are talking about because they have or have not put the time into doing their due dilligence. I have helped a number of people start (or, in more cases NOT start) a business, and you know who shows a greater chance of success? The person who has written a well-researched BP/BS, because they have a much greater chance at success as opposed to someone with experience but no qualitative/quantitative research into their proposed business.

What do these plans do? They show that the person has or does not have a working knowledge about their chosen business. I'm not impressed that a banker says that he did not see BPs because any of us who have gone to a bank knows that their criteria are generally based upon credit score, time in industry & and asset-base...NOT a business plan.

But what it does is force you to really look at the numbers of areas you maybe hadn't even thought of.

We can make and bottle a product. But until you look at time allotment for marketing, actual cost of packaging, etc. you don't see the overall picture.

I think the plan is simply a way to force you to look deeper at what you are getting into. And the sales projections are completely rediculous, but overall, I know if we hadn't set down and written one there are several areas which we took for granted but the plan forced us to come up with some very real numbers.

Yep, yep and yep.