It’s hard to argue against the business logic of a billionaire.
Especially one who has built a €5bn business empire from scratch.
But I’d fundamentally disagree with Richard Branson’s comments on business plans as reported in the Sunday Business Post of October 4th. Following the launch of his Virgin something or other in Dublin he was reported to have advised investors to “forget about business plans and just go with your gut feeling.” He maintains investors should ignore business plans and trust their instincts about the team and the idea. From the perspective of investors he says business plans are not worth the paper they are written on!
That’s pretty strong stuff.
But it isn’t good advice either for start-ups or established businesses looking to expand and grow.
Having spent many years reviewing and advising on business plans I’ve seen my fair share of good and bad plans.
Many plans with lavish financial projections of sales and profitability at the initial concept stage have been built on foundations of sand without the proper, thorough, business-case scrutiny. But you can’t rubbish the whole process because of the faults of some or be swayed by the comments of a master self-publicist like Branson.
The real value of a business plan is in the elimination of poor business decisions, the minimisation of risk and business threats and the concentration of focus on the key areas that can grow sales, profits and enable a business to get an edge on their competitors.
For any business plan I’m asked to review I look at the strength of the business proposal in relation to what market it’s targeted at.
I’d go along with Mr. Branson in his ‘gut feeling and instinct’ on issues such as:
- The likely demand for the product or service.
- How will it fare against existing and new competition?
- Changing market & consumer trends and how it is likely to fare against these.
- The strength of the promoters and their previous record.
But I’d be very wary of any business proposal that has not undertaken a thorough SWOT Analysis, market research and financial projections built from the ground up.
Investment funding is available from a multitude of sources. But only on the basis of proper, well-prepared business plans.
If you are expecting funding on the basis of “Just go with your gut feeling and lend/give us the money” you’ve no chance. Unless of course you are seeking investment from Mr. Branson himself!
Wishing you success in your business planning and the delivery of the expected results from these plans.