158 ENTREPRENEURSHIP
Gumpert’s approach emphasizes that “things change” and “stuff happens,” so entre-
preneurs should not lock in too early to a particular blueprint for action. Also there are
many ways entrepreneurs can bootstrap and save money.
This chapter is divided into four sections. The first section suggests that every new
venture should have a business plan at some point. The question is when? Entrepreneurs
who take the bootstrapping approach can wait, but those who are looking at a large-
scale project must write their plans earlier. The second section offers a detailed explana-
tion of the components of a business plan. The third section deals with questions an
entrepreneur is likely to hear from investors and others. The fourth section offers sug-
gestions for writing and presenting the plan. Entrepreneurs are judged by the way they
organize, write, and present their information, so the finished plan must be informative,
concise, and complete.WHY WRITE A BUSINESS PLAN?
When a new venture needs outside financing, it must have a plan. As Gumpert suggests,
this may not be necessary at the outset, but eventually it will be.The Costs of Planning
Entrepreneurs are often characterized as “doers,” individuals who like to act and let their
deeds speak for themselves, so one cost of a business plan is the entrepreneur’s need to
sit still long enough to write it. Hiring someone to write the plan is not an acceptable
substitute. Outsiders—consultants, accountants, and lawyers—are needed for advice and
expertise, but the founder or the initial top managers team should put the plan togeth-
er.^6 Only the entrepreneurs are sufficiently familiar with all the details, and it is they who
will make and take responsibility for the major decisions. Investors expect the founders
to be involved in and knowledgeable about all aspects of the proposed enterprise.
Developing and writing the plan takes time, money, and energy, and some entrepre-
neurial teams believe that these resources are best applied to actually working in the
business. In the short term that may be true, but over the long haul the team is the com-
pany’s most valuable, rarest, and most unique resource and its leaders are the architects
of organizational purpose.
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At some point, then, the best use of the entrepreneurs’ time
and energy is in creating, refining, and pursuing their vision.
Every business plan must deal with economic uncertainty and the risks facing the
firm, so there is a psychological cost in writing a plan that delineates everything that can
go wrong. Entrepreneurs are optimists who believe in the power of their own efforts.^8
They believe they will succeed, but a serious business plan exposes the venture’s vulner-
abilities. To offer full disclosure to a potential investor, partner, or supplier, the plan has
to list the risks of the business, one by one.
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Recognizing these risks and facing an uncer-
tain future can be uncomfortable, and it is one reason some business plans are never
written.
A final obstacle to writing a business plan is the fear, real or imagined, of premature-
ly closing off the new venture’s strategic direction. Should a new venture’s strategy be
focused on a narrow segment of the market? Should the firm be more open to oppor-
tunity, pursuing a broad market strategy? If the purpose of a plan is to encourage focus,