The Business Plan 159will it keep the entrepreneurs from remaining flexible? This is the trade-off between
planning and reacting.^10
The Benefits of Planning
The business plan can personally benefit the entrepreneurial team. Founding a new busi-
ness can be enormously fulfilling and exhilarating, but it is also anxiety-ridden and tense.
Usually a great deal of money is at stake, and the consequences of poor decisions can
affect many people for a long time. In developing and writing a business plan, the entre-
preneurial team reduces these anxieties and tensions by confronting them. They come to
grips with potential negative outcomes and the possibility of failure. The knowledge that
comes from this experience can reduce the level of worry and anxiety.
Conflicts. On a personal level, entrepreneurs may find themselves in conflict with the
demands of the new business. The founder may be motivated by the desire for substan-
tial income, public esteem, a sense of stability, and time for leisure and recreation once
the venture is off the ground, but the demands of the organization may get in the way.
First, a new firm requires reinvestment, and the more successful it is, the more money
it needs for growth. This interferes with an entrepreneur’s desire for substantial person-
al income: He or she may have to reinvest much of the initial profit. Second, acting as
a leader and manager often requires making tough personnel decisions. Individuals hurt
by these decisions may not hold the entrepreneur in high regard and maybe even
become enemies.
That anticipated period of stability may not materialize. Starting a new venture can
be exhausting, and entrepreneurs may feel they deserve to rest on their laurels, but often
the business will then be in a position where more risks need to be addressed, addition-
al crucial decisions have to be made, and earlier plans and strategies have to be reformu-
lated. When this happens the firm is in conflict with its creator, and the dreamed-of time
for leisure or family or community service must be deferred.
Business plans help entrepreneurs deal with these conflicts by recognizing issues
before they become serious problems. By anticipating these conflicting values and
writing them into the plan, entrepreneurs can reduce their own emotional strain.
When a specific conflict arises, the entrepreneur can refer to the business plan to help
resolve it.
When Sheri and Stuart Meland started their business, they did not plan for the prob-
lems that success would bring.^11 A lot of people plan carefully for coping with failure,
but what if their success exceeds their hopes? In July 2002 while they were graduate stu-
dents, the Melands started http://madcityhomes.com, offering flat-fee listing services for
residential home sellers. They listed 60 homes the first year, then 210, then 433. Their
operating costs are very low, but now the Melands are not sure what to do—sell the busi-
ness and return to graduate school? Stick with this profitable business?
Thomas Kinnear, a professor of entrepreneurial studies, says that in the early stage of
business success founders “basically end up having to decide whether they’re going to
be consumed by their own business. A lot of these people who stay wreck their own
business,” because they are not the right people to carry it on and they did not plan on
such success.^12