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9 THE BUSINESS PLAN
Andrew Zacharakis
The sole purpose of a business plan is to explore and answer questions—crit-
ical questions starting with whether the business idea is a viable opportunity.
During the dot-com boom of the late 1990’s, many entrepreneurs and ven-
ture capitalists questioned the importance of the business plan. Typical of
this hyperstartup phase are stories like James Walker. He generated financ-
ing on a 10-day-old company based on “a bunch of bullet points on a piece of
paper.” He added, “It has to happen quick” in the hypercompetitive wireless-
Internet-technology world. “There’s a revolution every year and a half now,”
Mr. Walker said.^1
Media stories abounded of the whiz kid college dropout who received
venture capital, zoomed to IPO (initial public offering), and cashed out a mul-
timillionaire in 18 months or less. The mythology of the dot-com entrepreneur
was that he didn’t have a business plan, only a couple of PowerPoint slides.
That was all it took to identify the opportunity, secure venture backing, and go
public. Why spend the 200 hours or so that a solid business plan often takes?
The NASDAQ crash of March 2000 and the subsequent death of many dot-com
high f lyers provides the clearest answer. Many of these businesses didn’t have
the potential to make profits—not then, not now, and not anytime in the fu-
ture. The easy money and quick returns of the late nineties have disappeared,
and what we are left with is the fact that good opportunities need good execu-
tion in order to succeed and a rigorous business plan process can assist in the
pursuit of entrepreneurial gold.
There is a common misperception that a business plan is primarily used
for raising capital. Although a good business plan assists in raising capital, the