Noah Parsons linked me over to Updating a Classic: Writing a Great Business Plan, on the Harvard Business School Working Knowledge site. Sean Silverthorne interviews William Sahlman, author of How to Write a Great Business Plan, "one of the most downloaded articles on Harvard Business Publishing since you wrote it in 1997." (And give me credit for linking to it here, that’s hard to do when I’ve written so much on the same subject, (as in the more recent Plan As You Go work … but then Harvard publishes his, not mine.)
I really like this: Sahlman was asked why that piece hit a nerve. He answered:
I tried to explain that a business plan can’t be a tightly crafted prediction of the future but rather a depiction of how events might unfold and a road map for change. I emphasized the notion that successful entrepreneurs constantly seek the right mixture of people, opportunity, context, and deal. They anticipate what can go wrong, what can go right, and they try to balance risk and reward.
And this, on what he would change:
Were I rewriting the article today, I might emphasize the importance of controlling your destiny by being conservative about access to capital. Many great ventures in the Internet era (pre-1999) ended up failing because they assumed they would have continued access to cheap capital. Many of those businesses failed, though the underlying idea was sensible. Similarly, we have seen a period when capital markets got ugly, which has a negative effect on all ventures, sensible and nonsensical.
Well said. Think about bootstrapping. Control your destiny. Especially these days.
Finally, there’s also a sidebar accompanying the article in which Sahlman writes about (rather than talks about) what he would change:
- A business plan can’t be a tightly crafted prediction of the future but rather a depiction of how events might unfold and a road map for change.
- The people making the forecasts are more important than the numbers themselves.
- What matters is having all the required ingredients (or a road map for getting them), not the exact form of communication.
- The best money comes from customers, not external investors.
That last point is golden: "the best money comes from customers, not external investors." I’m going to use it a lot.
And the whole piece reminds me, like it or not, that my plan-as-you-go business planning approach, while it is a new way of looking at it, and I hope a useful way of restating the fundamentals, is still more a return to fundamentals than anything else. The current economic crisis requires a new look and some new labels, but planning is still planning.