156 ENTREPRENEURSHIP
OWdo we put to use all the analysis and evaluation we did in Chapters 2, 3,
and 4? We write a business plan. The development and writing of the plan
marks the transition from strategy formulation to implementation of the new
venture creation. The entrepreneur or entrepreneurial team members have thus far col-
lected and analyzed information. They have examined their own preferences and goals
to understand why they want to go into business. They have evaluated the venture’s
resource base and determined what is rare, valuable, difficult to duplicate, and nonsub-
stitutable. They have sifted through mountains of product and market data, analyzing
environmental variables, market trends, and the competition. They have performed
innumerable mental experiments to visualize what the business will look like, how the
products or services will be produced or delivered, and how quality will be continuous-
ly monitored and improved.^1
Now it is time for action. The document produced is the business plan, a formal
written expression of the entrepreneurial vision, describing the strategy and operations
of the proposed venture. The business plan has aliases: Presented to a banker, it may be
called a “loan proposal.” A venture capital group might call it the “venture plan” or
“investment prospectus.” It may be offered to potential partners or top managers, sup-
pliers and distributors, lawyers, accountants, and consultants.
However, many firms have no need for a formal written business plan. Some grow
out of a hobby or recreational interest and the business is simply an extension of that
interest. For instance, a craftsperson or artist who occasionally sells an item does not
need a formal business plan to expand sales. Sometimes two or three friends begin a
small business—working out of someone’s garage to fix appliances or repair cars, for
example—and such start-ups do not require business plans. The vast majority of busi-
nesses around the world are started for under US$1000, so most nascent entrepre-
neursdo not need written plans. However, the planning process, the effort to envision
a desirable future and decide how to make it a reality, is always beneficial, whether or
not it results in a written plan.
In some countries, it is possible to start a business and receive financing before put-
ting together a business plan. Strong personal relationships or membership in a commu-
nity financing group will be sufficient. Friends, family, ethnic ties, and other group
affinities help entrepreneurs get started. Increasingly, however, the business-plan model
that emerged from the United States is spreading to other regions, especially for busi-
nesses that anticipate increasing sales and geographic growth, a steady source of capital,
and the possibility of becoming public companies. Most ventures never reach this stageH
opening sales indicating that it would gross
$1 million in its first year. The store became
profitable in just four months, and now has
two additional Dallas locations. In keeping
with the store’s slogan, Byerly’s up-front work
helped ensure that his new business would
be “pressed for success.”SOURCE: Adapted from Ann Zimmerman, “Do the
Research,” The Wall Street Journal Online, May 9, 2005.
Retrieved from the Web February 21, 2006.
http://online.wsj.com/article_print/SB1 11524102265424963
.html, and http://www.bibbentuckers.com.