To Business Plan, Or Not To Business Plan? Expert Views on Business Plans

As graduate students, we have repeatedly been told about the importance, the contents and the goal of business plans. Business plans, students have been told, serve three distinct purposes:

1.    A business plan can help to move you to action.  A business plan will help you to pull apart the pieces of starting a business and examine each piece by itself.  

2.      A business plan can be an invaluable tool to help keep you on track and moving in the direction you want to go -- a business plan can help to keep you focused.  

3.      A business plan can serve as a sales tool.  You will probably need outside financing to start your business, and a business plan is the tool you need to convince investors to come on board.  

These are the purposes and views of business plans that students have, but what do the experts think?? In order to answer this question, I chose two of the business industries experts on business plan writing and analyses: Jay Turo and David E. Gumpert.

Jay Turo earned a Bachelor's degree with Distinction and with Departmental Honors from Stanford 

University. In 1999, Jay Turo graduated with his MBA from UCLA’s Anderson School of 

Management. Along with his friend and soon to be business partner, Dave Lavinsky, the two soon founded Growthink, a strategic advisory and investment banking firm, after noticing that people wanted to launch internet ventures, but had no idea as to how to start or finance them. Jay Turo has spent the last 10 years advising and managing business clients. He has worked with all types of companies from new emerging small businesses to multi-million dollar corporations. Turo specializes in private equity investing and entrepreneurship. Turo is also a noted and respected angel investor. His corporate clients have included Deutsche Bank, McKesson, Infospace, Samsung, Porsche, & Paramount Pictures.

Turo adamantly believes that “there are ten key components that investors are looking for in a business plan: Executive Summary, Company Analysis, Industry Analysis, Customer Analysis, Analysis of Competition, Marketing Plan, Operations/Design and Development Plans, Management Team and the Financial Plan. Understanding and applying information to satisfy these components can make the difference between whether or not a business will be funded.”  Turo firmly believes that a well-written, concise and informative business plan is the key to ensuring success with the intended recipient.TT Investors aren’t generally interested in the 
Learn About Jay Turo

According to Turo, companies and potential investors could care less about the pomp and circumstance of graphics and the creativity of the business plan; they are much more interested in the information in the business plan and the profit that the business will make.t "The two most common pitfalls that Turo and his partner come across are professionalism and not enough information. Many businesses try to add colorful paper, fashion graphics and artwork to their cover sheet, but this is the quickest way to get their business plan discarded." Most investors only want to invest in a business that shows a large and thriving market for the product or service they’re offering, and an investor will only continue reading the business plan if it’s something they are interested in and could potentially secure the deal. 

David E. Gumpert is a graduate of the University of Chicago, Columbia University, and Harvard’s Business School. He worked as an editor at Inc. Magazine and the Harvard Business Review. He has authored many books on business and entrepreneurship and regularly blogs. Gumpert has written a number of books about small business and entrepreneurship, including Burn Your Business Plan! Gumpert, believes that the business plan should be customized to meet the needs of the company. For instance, “if the individual is looking to attract investors, then the business plan should be tailored to meet the preference of the investor.” Gumpert confirms, “it is the job of the entrepreneur to sell themselves, the business venture, and the potential success in the amount of time, space, and energy the investor is willing to spare.”

Uncharacteristically, Gumpert invests in another principle…“burn your business plan! (Entrepreneurship.org, n.d.).” Basically, Gumpert believes that effort means much more than intention. Entrepreneurs, according to Gumpert should be focused on the business and not on drafting a business plan. In essence, let your works speak for the business rather than your words about the business. Additionally, Gumpert feels as if some parts of the business plan, such as financial projections can be misleading and really are more writings of fiction and shouldn't be taken so seriously by potential investors. Gumpert alludes that while business plans can paint a prettier picture than reality might reflect, hard work and efforts to make business successful is much more effective.

Learn About David Gumpert

Although the experts moderately disagree on the approach and purpose of the business plan, they both agree that the most important items that investors are looking for are accurate and concise information about the company which leads to  profitability of the business. Whether you subscribe to Turo's approach concerning the 10 pertinent components of a good business plan or Gumpert's more hands-on approach, to interest an investor or company, you must undoubtedly subscribe to their definitives that time, knowledge and purpose must be components for a successful business plan and its execution. 

Business Plan Expert Views


Burn Your Business Plan!