Business Plan – What for?

It’s always funny when people talk about business plans, VCs who do not even have a business. It happens to me so often when people ask me how they can get funding for the “next big thing” idea they just had. The most I would want to see is a cash-flow for the next 12 month – with and without external funding – and a basic SWOT analysis.

Then they need to make me belief that they can do what they say. A business plan is not going to do that, as Marc Andressen said:

“…..A startup’s initial business plan doesn’t matter that much, because it is very hard to determine up front exactly what combination of product and market will result in success…”

You start a new venture and you have no idea where it is going to take you. The best thing to do is run your business, see where it takes you and then talk other peoples money, VCs, etc.

Getting money from banks or VCs is a risky business, here are people who tell you how to run your business, yet know close to nothing – certainly less than you – about your business. Question, if they know what they are doing, why do they need the contracts they make you sign – partners(?), give me a break.

Even better, have a look at the investments these guys made during the DotCom madness and see how much money they lost. Ever wondered why your parents pension is paying out less than they thought.

I learned one thing during the late 90’s – never, ever underestimate greed(!) – on the part of banks and VCs as on the part of those how seek funding.

If you want to do something good for yourself and your business idea, its bootstrap and stay away from banks and VCs for as long as you can – it is surprising what a little creative (but honest) cash-flow planning and bootstrapping can do.

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