The myth that is a business plan

Alongside the myth that Africans are lazy and intellectually inferior, to borrow from the acerbic Seitiso Ntlothebe, one of the biggest lies ever perpetuated is that one needs a business plan to start a business, even more preposterous if you already have a functioning product or prototype. Chances are that anyone who asks you for a business plan is more interested in wasting your time than assisting you secure funding; after all business plans are mostly written for the purpose of securing capital to start or expand a business. Others have argued that a business plan serves as some sort of roadmap for your business. Here is the business site Entrepreneur describing a business plan: ‘A business plan is also a road map that provides directions so a business can plan its future and helps it avoid bumps in the road.’ Excuse me, but that is poppycock. How many times have you, as an established entrepreneur, visited your business plan after writing it to find directions because somehow you found yourself lost and wondering where to go? Yet, your business surges ahead without any problems.

Before I trash the myth that is a business plan and come hard on those folks at IDC, NYDA and some of those other funding institutions that are as useful as a swimming costume in winter, let me share with you a parable about the origins of a business plan. Whether this is true, I cannot confirm. However, it makes for a nice and exciting story. Don’t we all love nice and exciting stories?

It is said that in 19th century America when robber barons were the talk of the town and their unrestrained wealth a conspicuous sign of success and supremacy, every man in the New World imagined himself filthy rich – if only they could start a business. Many a man – and man in this sense meaning male for women were only good enough for the kitchen and the bedroom – scuttled to the lobby of every funding institution around America, be it banks or loan shark dens depending on your vantage point, to borrow money to start a company. Never was the American Dream possible like the time of disgustingly rich men like Andrew Carnegie, Leland Stanford, J.P Morgan, Andrew Mellon, Cornelius Vanderbilt, John. D Rockefeller and many more. Every man, or should I say white man, in America wanted to be one of these powerful men. They desired the power and status that came with the wealth of these men, some of who came from humble beginnings.

How did one become a railway tycoon or an oil magnet in the America of 19th century? You formed a company. According to the tale all you needed was a good story to excite the bankers and the money would be yours. No paperwork was necessary. Of course, it was compulsory that you were white and male. This story sounds very much familiar. Perhaps the folks in Stellenbosch and Cape Town are in a much better position to confirm or deny application of these methods, but I am getting sidetracked.

Now how did a document known today as a business plan come about? Apparently the funding institutions would later realise that most of these men who they had loaned money knew nothing about running a business, let alone start one. Some would head straight to the nearest watering hole after securing the cash and took to the bottle with unhibited passion like a returning soldier, while others were expert criminals who made their living by borrowing money under the pretense of establishing a company. Of course, some of these men, to their credit, were honest chaps who were earnestly seeking capital to start their businesses; however, as it is usually the story of any entrepreneur, the business flopped and the money was lost. Some funding institutions went bust while others merely survived bankruptcy. A lesson was learned. No longer was one’s skin colour and gender alone a license to secure a bank loan or start-up capital. A contingency plan needed to be put in place to confirm the intentions of an entrepreneur, evaluate their business acumen and check their background; hence a complex and frustrating document called a business plan. Like I said, this tale is unverified, but a cursory study of 19th century American history and politics indicates that it was a free for all, so long as you were white and male. Unchecked lawlessness and corporate gluttony were the order of the day.

So, in South Africa of the 21st century, what does a business plan mean? It means nothing. Like I said, anyone who says bring me a business plan is bent on wasting your time. Hardly is it a case of gauging commitment on the part of the entrepreneur or establishing if the entrepreneur’s idea has potential. I dare you to take your business plan to NYDA, IDC or any of those government funding agencies today and see if you will receive any meaningful assistance. Apart from the fact that most of us cannot write a basic business plan, these agencies exist purely to tick boxes. They help entrepreneurs with nothing but a chilling demonstration of how laziness and ill-discipline from incompetent people looks like. Thus, writing a business plan is merely hoping that someone might be in a good mood and actually read your plan – because another problem is reading – and recommend that you be funded if the document makes financial sense. Otherwise, as an entrepreneur, desist from writing business plans and just start your business; that is unless you enjoy walking about with your begging-bowl asking banks, funding institutions and venture capitalists for money. If that is not the case, you have no business writing business plans.

Most successful companies throughout history were started without a drop of ink being squandered on a ridiculous paper such as a business plan. Instead the ink was used to sign cheques for start-up funding or business scaling. Previously, I wrote about how it took Sergey Brin and Larry Page, the maverick founders of Google, 15 minutes to secure $100 000 in seed funding from Andy Bechtolsheim to fuel their company. They simply presented their solution to him and he was impressed enough to write a cheque, even though he wasn’t sure how they planned making money. Even almost a year later when Google received a dizzying $25 million from two of the world most revered venture capital firms – Kleiner Perkins Caufield & Byers and Sequoia Capital – they still did not have a business plan; yet here we are today with Google commanding 92% of the world’s search technology and a heart stopping market capitalisation of $770 billion. These numbers are a mere wet dream for those who call themselves ‘captains of industry’ in our divided South Africa, despite still benefiting from the legacy of an unscrupulous apartheid government. In 2018, I doubt that Sergey and Larry – Computer Science PhD dropouts from Stanford University – know how to draft a business plan.

The point of this column is to emphasise that writing a business plan is nonsense and absolute hogwash. Focus on your product or the service you provide and you will be fine. Most importantly, for those who are beginning, you do not need a lot of money to start your business. Simplify your strategy – which is your ‘business plan’ – and you will realise that it is relatively easy to start. Anyone who preaches the importance of sitting down at a desk and wasting time on writing down a myth that is a business plan is a clown who wishes you no good. Ignore that fool. All the best with your ventures. Pula!

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