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Business Planning: A Permission Based Approach.

Anonymous on May 03, 2010 Source: e360 Blog

Lately it seems as if the term “business plan” has become synonymous with the entrepreneurship education initiatives that have sprung up on nearly every college campus and small business development center in the country.

Business plan competitions, business plan writing clinics, business planning software, business plan templates, the list goes on. 

All too often, the business plan becomes the default option for educators and others who have never started a business and don’t fully understand the process. Now don’t get me wrong; planning is important, yet over-emphasizing the business plan can be misleading and often overlooks the more important process (and the really hard work) of proving that there is a market for your product or service. And proving that there is a market usually requires more than a business plan template and a Google search.

In a 2008 interview, entrepreneur and investor Bill Recker described how business plans often become the “surrogate” for the real work of proving there is a market and why so many of the elegantly written business plans that win competitions, ultimately fail.

For entrepreneurs, the hierarchical command and control mindset is replaced by a more horizontal approach. Rather than seeking permission from an investor, a professor or the local small business incubator, successful entrepreneurs understand that permission will ultimately come from the market. And that is where they tend to focus their time and attention.

In Amar Bhide’s book, The Origin and Evolution of New Businesses, he examines hundreds of successful ventures and finds that the typical business has humble, improvised origins and that the well-planned start-ups, backed by substantial venture capital, are by far the exception rather than the rule. According to Bhide, even entrepreneurs like Bill Gates and Sam Walton initially pursue small, uncertain opportunities, without much capital, market research, or breakthrough technologies.

Abraham Maslow once said, "He that is good with a hammer tends to think everything is a nail." While a carefully planned, well articulated business plan might appeal to a college professor, an SBA counselor or a venture capital investor, as entrepreneurs; we should not lose sight of the fact that permission to succeed does not come from above. Permission to succeed ultimately comes from the market.

Once you prove that people will pay for your product or service, getting permission from investors will be much easier. And, with a bit of luck, investors may be asking permission to invest in you.

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