For (almost) three decades, I've enjoyed the exhilaration (and occasionally, the exasperation) of operating my own businesses, ... and, for most of the past 10 years, I've had the pleasure and satisfaction that comes from helping other entrepreneurs start, expand and operate theirs ... usually by virtue of assisting them in their search for "The Perfect Business Plan."
So, being something of a student of "successful businesses", I've observed that the following 3 facts are common to all businesses ... and thus, I've come to consider them "rules" or "laws":
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... The RIGHT PEOPLE, ... ENOUGH MONEY, ... and A GOOD IDEA. II. NO COMPANY CAN SUCCEED IN TODAY'S BUSINESS CLIMATE, WITHOUT FIRST CREATING, THEN ADHERING TO, A SOLID PLAN. III. NO ONE CAN CREATE A GOOD BUSINESS PLAN BUT THE ENTREPRENEUR. |
There are other rules, to be sure, but these are the ones that, if you
break one, you're out, ... and somebody else is in. Some of the entrepreneurs with whom I've dealt, started out deficient in one or more of the above... and didn't realize it. The development of a plan brought the problem to the surface. If they solved it, things moved forward ... if they didn't, things stopped ... period.
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This is true of all businesses, large and small, start-up or firmly established. I guess that's why it's a "law".
To see if this is accurate ...
... ask Eastern Air Lines if they had a few people problems (it is a bit late)!
... or, ask Chrysler if they should have preserved capital in the early 70's to modernize their plants and downsize their cars to meet the Japanese import threat. That one cost everybody.
For that matter, ask any of a few dozen S&L bankers (some in jail!) if it's a good idea to lend mortgage money for an amount more than the worth of a property. That one really cost everybody!
Of course, you never hear about the ones who didn't put all three together in the first place.
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The second "rule" ... was the one about creating a good plan and then sticking to it. The historical results of disregarding this are too numerous to mention. After all, a business without a good Business Plan ... is like a ship ... an otherwise capable vessel, complete with captain and crew ... yet with no map! You know the story ? ... well, I'm still not getting on for the "ride."
My favorite example of this is Eastman Kodak. This is because EK had repeatedly made Forbes' annual list of the "Ten Best Managed Companies", (and also, because I dealt with them for fifteen years.)
In the early 80's, Kodak began to market an instant camera and film system ... in direct competition with Polaroid. Since they had been manufacturing instant film under license from Polaroid for years, they certainly knew how to do it! Polaroid successfully sued for infringement. You know, you'd think somebody at Kodak would have thought of that.
After the smoke settled, EK management admitted it was a "mistake" i.e., ... a bad idea. So ... here's a company with enormous resources... (all the money you could possibly need) ...the best and brightest (supposedly) management, ...literally, the company that created an industry.... with a poor plan... ...which lost 750 million dollars. ...Oops!
As for the third rule ...
... that only the entrepreneur can create a business plan... this may, at first blush, sound contradictory to the purposes for which this is written. However, since this is one of those "rules" I mentioned, I can't violate it, and neither can anyone else. The near total involvement of the entrepreneur is critical to the evolution of a good business plan. To expect someone to "do it for you" is a mistake.
Naturally, many seek help with organizing, writing, and polishing the plan ... as well as the diligence that underlies the Company's assumptions about growth. That's OK. That's like spending time with your CPA to oversee financial planning or with a marketing expert to help analyze media costs. Just so long as there is an active interchange of ideas and information and the creator is fully aware of, and understands, every detail.
Because, ... if you find yourself in front of the "right" investor You have to be fully involved. Learn all you can about the marketplace, your customers, and the competition.
Get competitors to send you their information. Buy a competing product and take it apart. Talk to any prospective customers you can find. Talk with your accountant, lawyer, or priest. You must know every detail.
So, as I said, only the entrepreneur can create a business plan. (Incidentally, I don't create business plans, I help people write and develop them.) A Good Business Plan A "good plan" tells your Company's story in a compelling manner, ... it is a concise, clear, easy read ... but MOST IMPORTANTLY, a really good Business Plan creates a Mandate for Action in the mind of the Reader ... compelling the Reader to ACT and get involved.
Which Plans Get The Money ? There are just a few reasons why people create a business plan. Some folks have an operating business and want to expand, so they are seeking capital. Some have a great idea and want to start a business, so they get a business plan, then go looking for someone else's money. Some folks work for a large company and want to create or expand a division or go into new markets, so they write a business plan to convince their bosses to put up the money.
By and large, what most have in common, is the money.
With respect to that, all Business Plans can be ranked from 1 thru 10. One's through nine's can all be competent Plans ... but, only 10's get money. So, if you need help to turn your Business Plan into a "10", ... get it!
The real truth is, however, that business plans don't raise money... people raise money ! Thus, to the extent that the idea (Plan) is a very good one and the people involved are the very best, is the extent to which the idea is likely to get money. Therefore, you must create and develop a good plan. Some Final Thoughts...
Regardless of whether or not a plan is intended to raise capital ... it must be "used" ... updated frequently ... and, become a living document in your Company.. Update it as often as important changes occur ... a new key executive ... a new product ... a new marketing opportunity ... all should be incorporated. The plan then serves its highest and best function, and becomes a steering device and measure of progress. In short, it becomes "the map".
You should also keep a plan current because you never know when you might need it again. I used (essentially) the same one three times in five years ...
and got money each time.
Finally, ... and this is most important ... Don't let "the thing" ... (your new idea, business, expansion plan, ___(fill in the blank)___ dominate your life. The personal involvement that an entrepreneur feels for HIS PROJECT can cause the idea to take on a "life of it's own." Most often, "it" represents the dreams and hopes of it's creator. But, you must avoid getting so involved with the THING that you don't take the time to step back and look at it with the cold light of objectivity, ... as is absolutely necessary during the Planning Process. So, take that emotional investment and match it with an equal amount of quality time with fully objective professionals.
I've been there ... that is, ... at the birth of many companies ... and I take that event very seriously. That's the reason I take on fairly few projects. ... Because ... to be effective at what I do, it is necessary to step into the dreamer's shoes and share "the dream".
In summary, first, be sure your idea is truly a good one ... (you have a good plan) ... then, get the very best people for the job... and the money will be there.
If you seek help and choose to have us work together, I pledge that my firm will do the best job possible to get the results you need. If you choose to work with someone else, I wish you the best of luck at one of the most challenging things you'll ever do. If you choose not to get assistance, then do it yourself ... JUST DO IT !
If you would like to talk, send me
email or call me at 727-392-2688. It would be my pleasure to help you make YOUR Business Plan a "10".
... and you won't get there without a good business plan ... and you are asked a question, ... you must have a good answer.
Richard L. Fogleman
Managing Partner
Fogleman, Rich & Rose
