By Catherine Wijnberg
The business plan is NOT the solution to entrepreneurial success, in fact I would go as far as to say that more often than not, the business plan is a road block to progress for a small business start-up.
In case you think I have lost my wits, I am not alone with these thoughts. In his book ‘Lose the Business Plan’, Raizcorp CEO Allon Raiz concurs and adds that the likelihood of any plan being followed to the letter is very slim and that the entrepreneur has to be able to rethink his plan and implement new actions all the time. When you run a business, you will not survive if you are not flexible and able to adapt.
Certainly there is value in a good business plan – the competitor analysis, financial projections & a searching risk analysis are a vital part of assessing the potential of a new business. Frankly I have seen too many heartbreaking failures where people lost their entire life savings on silly ventures, to ever suggest anyone launches their dream business without some business assessment basics.
The problem though is two-fold – firstly plans can and do lie – and a well told lie is almost worse than complete ignorance, for in the latter case ones own ‘flying by the seat of your pants’ intuition can provide better guidance than the confusing untruths contained in a poorly conceived business plan.
More importantly, even a well written plan is a problem if it is over complicated and contains confusing MBA jargon that makes the aspiring entrepreneur feel stupid and terrorizes them to a standstill.
In fact just recently I had a distraught email from a young man in Gauteng concerned that his Business Plan was not creating the success he anticipated. He was at a complete loss to understand how to move from this theory stage into practice. The lengthy content of the business plan written for him by a professional service provider had paralysed him into inaction and dulled his own logic. He is not alone – there are many frustrated people with a Business Plan and no business – where the Plan itself has become a hindrance to the natural entrepreneurial talent that is yearning to burst forth.
What concerns me more is that there is a layer of people in the SMME development sector who believe that the business plan itself is the holy grail to progress. In practice the theoretical plan-making task has become a diversion from the real need, which is support to start the actual business. People who have no entrepreneurial experience themselves are being paid to write business plans for others and in the process over-complicating good ideas, creating overblown & overambitious plans for small startup entrepreneurs.
The end result more often than not is that the original modest and do-able project becomes a million Rand nightmare, which can only be started with funding from a Bank, and with a highly skilled business specialist at the helm.
This for a new business start-up with no prior business experience is like asking a grade one pupil to sit matric. Not only will they fail the exam, but they will be too terrified to return to school the next day.
Entrepreneurship is not that complicated! Simple ideas, simple solutions. Local needs local solutions. Small, micro businesses need practical realistic assistance with the one, two, three of getting going in business, and this doesn’t need a 25 page business plan. These small businesses don’t all need mountains of start-up capital – in fact many of the most successful small businesses have been started with nothing but a good idea, lots of passion and a small loan from a friend or relative. Believe me, I speak from experience.
So what is the purpose of a Business Plan, and when should we expend our efforts writing them?
A Business plan is a process, and a tool. It is a process for gathering information about how the new venture will manifest and after careful analysis of the situation provides a conclusion about its likely success. It also guides the implementation process and can be an essential tool in raising funding or Venture Capital. The content needs to be properly understood and is best written by the entrepreneur with guidance from an experienced and skillful business development support team, rather than a cut and paste solution provided by an outsider. A plan written by the entrepreneur with guidance from an experienced consultant should bring a mix of experience and enthusiasm that creates a healthy balance of dreams and reality.
A fully developed business plan is essential when capital is required and when risks are high. The more complicated the business, the more in-depth must the plan be.
Most importantly, a business plan needs to be written for the right reasons. When all the facts and figures are done it must provide the encouragement the team needs to, in Richard Branson’s famous words, Screw it – Just Do it!
Catherine Wijnberg is Director and Founder of Fetola (www.fetola.co.za) – Enterprise Development professionals and SME growth specialists.
Catherine has owned and operated small businesses in three countries across five different sectors, and has successfully conceptualised, designed and implemented several award-winning community and business development programmes, including the Legends Incubator programme.
Her most recent initiative, the Graduate Asset Placement (GAP) Programme, seeks to place 24 000 unemployed graduates into internships over the next three years, creating in the region of 8000 permanent jobs.