How NOT to Write a Business Plan

Ayn Rand and How NOT to write a business plan

Ayn Rand’s classic, “Atlas Shrugged,” rightly celebrates free-market capitalism. However, while Rand’s ideas and notions may energize entrepreneurs, Ms. Rand shows a naive view of how to write a business plan. In particular, Rand misses the boat on three key business planning topics:

Relevance of the Team

Rand’s view of entrepreneurship and free-market capitalism places the entrepreneur at the center of the economic universe. And that theme in a novel makes for good reading. In “Atlas Shrugged,” her entrepreneurial heroes single-handedly create large industrial firms like Reardon Steel and Wyatt Oil. But Rand misses the contribution of the people within an organization other than the entrepreneur.

Consider for a moment the example of Microsoft. Bill Gates may have programmed key bits of the MS-DOS operating system. But Microsoft—and any other wildly successful venture—relies on the innovative contributions of dozens of key people.

Business Planning Tip: Do include detailed profiles of key venture personnel in your plan.

Randomness, Risk and Plain Old Good Luck

Rand views entrepreneurial success as a natural result of intelligence and hard work. And that’s kind of a handy starting point if you’re planning a business and thinking about how to write a winning business plan. But Rand misses an entrepreneurial reality that any veteran entrepreneur will tell you about: the huge impact that good luck or bad luck has on the ultimate success of the venture. Many brillant workaholics fail to achieve entrepreneurial success.

Let’s be clear–this writer is not saying that super-successful entrepreneurs aren’t smart and hard-working. They are.

So, bottom-line, you do need more than luck to build a successful, sustainable business. But you also need more than intelligence and hard work.

Business Planning Tip: Do perform scenario planning and what-if analysis in your business planning so you have some sense about the elasticity of your business plan. Furthermore, make room for a few failures, delays and general bouts of bad luck.

Importance of Non-Technological Innovation

A final observation about Ayn Rand and how she isn’t maybe the greatest person in the world to look to for help with how to write a business plan— in spite of her enthusiasm for entrepreneurship: Rand thinks about innovation and entrepreneurship in terms of technology. For example, to her, innovation means new manufacturing tools, new oil drilling techniques, and new fuel-efficient engine technologies. Obviously, technological breakthroughs do create opportunities for entrepreneurs. But as management guru Peter Drucker points in the classic text “Innovation and Entrepreneurship,” business process innovation can also be powerful. And what’s more, because technological innovation tends to be closely watched, highly anticipated and rather conspicuous, business process innovation is often a better bet for new businesses.

Business Planning Tip: If you doubt the power of business process innovation, ask yourself whether Dell Computer’s bigger innovation was in personal computing… or supply chain management. Some business process innovators are arguably more innovative than hardware and software companies.

About the Author: Stephen L. Nelson is a business consultand and accountant in Redmond, Washington. Nelson also edits the Write Your Own Business Plan web site, which explains how to write winning business plans.

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