Helping companies do the best possible due diligence

Why Every Company Needs a Business Plan

Over the decades, I have heard every excuse why a company does not need a business plan. Some of these excuses are very creative, some very silly, some very foolish, some quite daft, some very obtuse, some so ludicrous that no one can fathom the lack of reasoning. One young firm told me they needed data mining more than a business plan. Let’s ignore the obvious question of on what large group of data do they have to perform data mining when they are less than two years old. What will happen to this firm when they go to equity sources, or debt sources, or try to run their firm over the next few years, all without a business plan? Nada… Zilch… Nil… Naught… Nothing… Zero… Zip… In fact, the equity and debt sources will escort them right out of their offices, and the firm will wander, maybe get somewhere, most likely nowhere great.

‘Cheshire Puss,’… ‘Would you tell me, please, which way I ought to go from here?’ said Alice.

'That depends a good deal on where you want to get to,' said the Cat.

'I don't much care where-' said Alice.

'Then it doesn't matter which way you go,' said the Cat.

'-so long as I get SOMEWHERE,' Alice added as an explanation.

'Oh, you're sure to do that,' said the Cat, 'if you only walk long enough.'

Lewis Carroll, Alice’s Adventures in Wonderland

So… pick any direction … Are you going anywhere in particular? How long can you keep walking?

Here are some of the many good reasons why every firm needs a business plan:

• When you want equity sources to consider your firm’s request for capital.
• When you want debt sources to consider your firm’s request for capital.
• When you want to show your sophistication.
• When you want to have a focused set of activities for your firm.
• When you want people to take your firm seriously.
• When you want to show your firm’s history accurately.
• When you want to show your firm’s management capabilities.
• When you want to show your firm’s competitive marketplace position.
• When you want to define where your firm is going.
• When you want how your firm is going to achieve its goals.
• When you want your firm to save money.
• When you want your firm to save time.
• When you want to understand your firm’s costs.
• When you want to understand your firm’s potential losses.
• When you want to show how prepared your firm is.
• When you want to understand your firm’s revenues.
• When you want to understand your firm’s customers.
• When you want to understand your firm’s products & services.
• When you want to control your strategies, finances, objectives, or anything else.
• When you want to understand your firm’s people.

The list goes on and on. If you are leading a business or part of the team leading the business, you have to know where you are, where you want to get to, and how you are going to get there. Your business plan is an absolutely critical foundation requirement for your business, and your plan should be a living roadmap that changes and grows with the changes and growth of your business.

Charles F. Bacon, CEO & Keeper of the Vision
charlesbacon@superdiligence.com
Due Diligence, Inc.