| A business plan for a startup venture is most | | | | finds to be lacking. |
| successful if it serves three purposes: attracting | | | | Thinking Through Strategy |
| outside funding, helping the managers think through | | | | A business plan also serves the purpose of letting |
| strategy, and providing a road map for future action | | | | entrepreneurs "make mistakes on paper" before |
| and evaluation. Many business plans end up serving | | | | making them in wasted dollars, cents, and time. Putting |
| only one or two of these purposes, leading to | | | | the plan on paper allows time to consider how the |
| problems for the business and contributing to the high | | | | elements of a strategy complement the research |
| rate of new business failure. | | | | done and the resources of the firm. It also allows |
| Attracting Outside Funding | | | | advisors and other managers to give feedback on the |
| Most startups cannot launch without funding from | | | | plan of action. |
| investors and lenders beyond the founders of the | | | | Creating a Road Map |
| company. For most funders, reading a business plan is | | | | When kinks are worked out, the plan becomes an |
| an important preliminary (but not the only) step to | | | | excellent tool to direct the company with. It should |
| choose who to fund. The business plan must attempt | | | | include the high level actions the firm must take, which |
| to convince funders to move on to direct talks with the | | | | can then be broken down into specific schedules and |
| founders, to go through their own process of due | | | | actions by the company's manager or managers. As |
| diligence, and to move on to negotiations over the | | | | time goes on, managers can return to the plan and its |
| financing deal. The business plan cannot convince | | | | financial projections to judge the progress of the |
| funders to give money on its own, but it can easily kill | | | | company, how successful the planning was, and |
| the company's chances of getting outside funding it | | | | whether company is following the plan well. |