I just returned from the beautiful Rexburg, Idaho campus of Brigham
Young University where I was a guest judge at a business plan
competition hosted by the business department at the university.  What
a great experience that was.  If you haven’t experienced the energy and
enthusiasm of business students who can hardly wait to take the world
by storm, you’re really missing something.  This was probably the
highlight of my month.

As I thought about my own experience with business plans over the years, two uses came to mind.

1.    Business plans are a means of securing capital from a bank or an investor. 
Nobody is going to give you anything until they know enough about your
business too be comfortable.  The number one reason businesses prepare
a business plan is to secure financing.  When the plan is thoroughly
prepared (this is not the time to exaggerate,)   thoughtfully
presented, and your position is absolutely defendable, your chances for
success go up.  On the other hand, when your assumptions are inflated,
when there is no meat to how you expect to achieve your goals, etc.,
your likelihood of failure increases.  Don’t ever forget that.

2.    Business plans can be used as a road map for your business. 
This is a distant second to using the plan to secure financing.  In a
mature company, the plan can be (and in some cases is) used as a
benchmark against which decisions can be measured.  Of course, in a
start-up, things change so fast that the plan you made before lunch may
be outdated before you go home for the day.

The truth is,  most plans are presented at the bank, where the loan
officer grills you until she’s satisfied your plan holds water, then
you leave the bank and never look at the plan again.   It probably
shouldn’t be that way, but it often is.

Even though the business plan may have a short life, it is a
critical piece of the puzzle.  If you haven’t seen many business plans,
I suggest you try and find plans from as many companies as you can. 
Reading them with a critical eye is very educational.  Just seeing the
mistakes of others makes it less likely you’ll make those mistakes
yourself.  This is one of those deals where you really can learn from
the mistakes of others.

Unless you’re one of those people who prefers to make your own mistakes. In which case, good luck!!