In the article, “What
is a Business Plan and Why Does my Company Need One? Achieve Company Goals and Objectives
Through Writing a Good Business Plan” Rosemary Peavler
states that:
“A
business plan is probably the most important and useful document you, as a
prospective or current owner of a small business, will ever compile. It is a
written statement that sets forth your business’s mission and objectives and,
in detail, how it is going to reach them. The business plan details the
ownership and management structure of the business, the operational and
financial details, and how it hopes to achieve its objectives.”
In developing
my business idea (SadaBlue
Media Solutions), it became quite apparent that I needed a business plan to
guide me in the steps necessary to make it a success. I wanted expert advice
and/or opinions for or against the necessity of having a business plan. David F.
McShea, partner at the law firm Perkins Coie and William Hsu, co-founder of the
LA-based start-up accelerator MuckerLab, gave interesting perspectives in a debate on writing or not writing a business plan.
David F. McShea, in more than 20 years of practice, has handled numerous
significant transactions, mergers and acquisitions, public equity and debt
financings, and venture capital financings. He has represented several
leading companies through high-growth stages, aQuantive Inc. from
incorporation through its IPO, numerous acquisitions and its sale to Microsoft
for $6.3 billion. He has represented Amazon.com from private company
through IPO and post-IPO mergers and acquisitions. In addition to working
with deal-intensive growth companies, David represents several venture capital
firms. His corporate clients include Amazon.com, Highspot, Inc.,
Emeritus, Seattle Bank, Seeq Corporation, SkyKick and Zillow
Inc. He is a frequent speaker on corporate governance, initial public
offerings and venture capital finance topics. ("Perkins coie, legal," 2014)
William Hsu
is co-founder and managing partner at MuckerLab. He has spent his career as
both a startup entrepreneur as well as an executive of a Fortune 100 company.
Prior to MuckerLab, Hsu was the SVP and Chief Product Officer of AT&T
Interactive where he owned P/L, Product Management, Product Marketing, and UX responsibilities
for all digital advertising initiatives for greater AT&T. As a 23-year old,
he was the founder and EVP of Product Development for BuildPoint, the leader in
providing bidding management and marketplace services to the commercial
construction industry. Hsu helped the company grow to over 250
employees and raised over $50M in venture capital. The company was acquired in
2004. Hsu holds a B.S. in Industrial Engineering from the Terman School of
Engineering at Stanford University and a MBA from the Wharton School of
University of Pennsylvania. ("ecorner
stanford university’s," 2013)
McShea is absolutely for taking the time to write a business
plan when you are starting a new business. He states, “writing a business plan
may actually convince you to dispense with or change your
original business concept and create a better, stronger business concept
instead” (Zetlin, 2013). Apart from the fact that potential investors will
ignore you if you do not have a plan, McShea believes that you will gain knowledge
from the analysis and research that you have carried out, and this will enable
you to portray your vision for the business more credibly and persuasively.
(Zetlin, 2013)
McShea’s advice is to write your
business plan clearly and simply as the average reader should be able to grasp
what your product or service is, how it creates value, who will use it and what
is the market opportunity. He also states that inflated hype is a turn off for
most savvy investors. (Zetlin, 2013)
Hsu is absolutely against taking the time to write a business plan. He says the time
spent writing a 40-page business plan would be better spent talking, selling
and understanding customers and their needs. An advantage of not having a
business plan, says Hsu, is that by cutting out the months needed to research
and write a business plan the entrepreneur can focus on building products and
selling to customers. Hsu says that a short 10-15-page presentation that
summarizes the business opportunity is good enough. His advice is not to create
a business plan but to write down all the things, which typically are included
in a business plan, on a couple of large whiteboards; target customers,
pricing, products, etc. Start building and selling the product to its presumed
customers and use this customer development opportunity to get as much data on
the highest risk factors (is my pricing too high?) and go back to the
whiteboard and adjust your strategies and plans. As you continue to build and
sell your products, check off the risks that you have proved or disproved which
will help you change your strategies and even the product itself. (Zetlin,
2013)
In concluding my
research on the necessity for a business plan, I must say that I disagree with
Hsu. I will definitely be taking the advice of McShea which is to write my
business plan clearly and simply so that the average reader will be able to
grasp its contents as not every potential investor is a graduate of a business
or law university. If I were to make a presentation as per Hsu I would still
have to do in-depth research and analysis of the industry, I would have to get
the financial projections as well as the potentials for expanding my business;
therefore it makes sense in putting together a detailed plan. Using a
whiteboard may create a scenario where my projections are ‘erased’ and I will
have to do it all over again. In following McShea’s advice my business plan
will certainly be free of ‘inflated hype’ in order to attract investors.
Resource Materials:
http://ecorner.stanford.edu/author/william_hsu
http://www.perkinscoie.com/dmcshea/
http://www.inc.com/minda-zetlin/should-you-write-a-business-plan-2-experts-debate.html#ixzz39qQecqSw
http://bizfinance.about.com/od/startabusiness/a/what-is-a-business-plan-and-why-does-my-company-need-one.htm
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