How to Write a Great

Business Plan

By William A. Sahlman

Amit Kumar
Roll No: X01004

0
Name: Amit Kumar
Roll No: X01004
Course Name: Organizational Structure and Design

Assignment Topic: “How to write a great business plan”

Abstract
“How to write a great business plan” is an article which gives the insight about the
various factors that are going to affect the business plan in long term. Here in this
article four major factors mentioned are people, opportunity, context and risk &
rewards. Any business plan starts with the people/ the team, they are the major
assets for any business enterprise. Their experience and communication to the
external world can make the business run smoothly. Second one is the opportunity,
as the world is changing with a rapid rate and if one has to become successful then
business plan must be made as per consideration of what market actually wants,
flexibility in the process that modifications can be done as per the requirements.
Third one is the context, looking in various economic activities, Government rules
and regulations one can act accordingly and the final factor is risk and reward, how
the plan is going to mitigate the risk of the business enterprise. All these factors
should be taken into consideration before writing a business plan to make it
successful.
Introduction
“How to Write a Great Business Plan” is an implicit work shared by the
author, William A. Sahlman. By his invaluable experience and numerous cases, that
he captured by interacting many entrepreneurs, he is vocal in suggesting that new
venture or start-ups or entrepreneurship is not a mere number crunching game.
There are other factors that contribute much more than numbers. For a great
business, an entrepreneur must envisage those factors first and then support his
claim through numbers.
As per the author, if new ventures are flooded with ideas and dreams to
transform, investors are wolves of the game, counting each of their single penny
invested. Investors have experienced enough to read the proposal and they already
discount the numbers presented to them. Investors are too, not looking numbers
alone, but the zeal of execution and the mindset that reads the forthcoming risks
and a team that is capable enough to mitigate it through wise decisions and not by
product alone.

1
Review of Article and Summary
In the feature article "How to write a great business plan," the author, William A.
Sahlman, explains his opinion about what’s wrong with most business plans? And
he suggested the different types of factors which are going to affect the business
plan in long term. It has been seen that most people waste too much ink on numbers
and devote too little to the information that really matters to intelligent investors.
There is no short cut or winning formula given on the books or software packages
for the success of business. To have a success in a business the author emphasis on
mainly four independent factors which are critical to every new venture. They are:
a. The People
b. The Opportunity
c. The Context
d. Risk and Reward

The author said about the assumption behind the framework is that every great
business have attributes that are easy to identify but hard to assemble. They have an
experienced, energetic managerial team from the top to bottom. Now, let me
through some insights on the each factors:

a. The People: This is one of the crucial factor for any business plan. This help to
build right team. Without right team no business can run. Every business plan must
describe each team member’s knowledge of the new venture’s type of product or
services, its production processes and the market itself from competitors to
customers. Many investors also look into the contacts of team to the market as this
help the enterprise to grow faster because the members of the team is much aware
about the suppliers, customers and employees. The venture/Enterprise may be new
but the team will be experienced one. As Arthur Rock, who is associated with
formation of companies like Apple, Intel states that “I invest in people, not ideas”
and “If you can find good people, if they’re wrong about the product, they will make
a switch, so what good is it to understand the product that they’re talking about in
the first place”

b. The Opportunity: This factor mainly states about the opportunity of business to
expand in the market. i.e., is the total market for the venture/ enterprise is service
large, rapidly growing or both? Entrepreneurs and investors look on large and rapidly
growing market because it is easier to gain market share here than fighting in mature
and stagnant market. The author has shared the example of Computer disk-drive
which has great opportunity in late 1970’s but after twenty years the thrill has gone.
So, with the changing technology and time one has to focus on the key opportunity
and grab the chance before it gone. There are lot of opportunity in Information
2
service industry as the content the customer receive is very cheap also customers pay
in advance of receiving the service. So, it is better for an entrepreneurs/ venture to
make sure about the industry that they are large/growing and structurally attractive.
After finalizing the industry, the business plan must describe in details how the
company will built and launch its product/ service in the market. The market is as
fickle as it is unpredictable. If the product got clicked by the consumers then it is
going to be big hit. (i.e., who would have guessed that plug in room deodorizer would
sell?). They have also suggested the nine questions that every business plan should
answer like who is the new venture customers, how does the customer make
decisions about buying this product or service and so on. Apart from this there are
list of questions about new venture’s opportunity focuses on the direct revenues and
the cost of producing and marketing products. These are: when does the business
have to buy resources, such as supplies, raw materials and people?, when does the
business have to pay for them? etc. Here, Every investor/ entrepreneur want to buy
raw materials at a cheaper rate, process at a very minimal cost, sell at a high price,
get the money early from the market and pay late to the suppliers.

For Starters/Entrepreneur there are various set of questions about the competitor
which need to be answered like who are the new starters/venture’s current
competitors? What resources do they control? What are their strength and
weaknesses? etc. There are a lot of opportunities and vulnerabilities in the business/
enterprise but the most important thing is how the team is going to prove that the
business can run effectively in any circumstances.
c. The Context: Every opportunity exist in a context. At each level there are factors
which are going to affect the business like in Macroeconomic environment
(Inflation, Exchange rates, etc), Government rules and regulations provides the
opportunity to grow and utilize the resources in the best possible way. Author has
taken the example of Airline industry, where due to change in certain policies they
have created an opportunity in which more than 100 companies were formed.
d. Risk and Reward: They show the people, the opportunity, and the context from
multiple angles. They unfold possibilities of action and reaction. A good business
plan discuss with the team, find the opportunity & context as a moving target. As
future is unpredictable and with right team we can assure the investors that the risk
can be mitigated as all probable cause has been taken into consideration before
making the business plan.
Here author has mentioned about the myth that entrepreneurs are risk seekers. As,
all sane people want to avoid risk. One of the Harvard Business School Professor
Howard Stevenson says “true entrepreneurs want to capture all the rewards and give
all the risk to others”.
3
Looking into all the above factors we can able to make a great business plan. When
the plan is written the ultimate goal is to land a deal/ execute. Some of the
characteristic of a sensible deal is as follows: they are simple, they are fair, they
emphasize trust rather than legal ties, etc.
One of the basic rule before launching the new product is before launching the
product in full fledge, kindly go through launching the product in little piece and in
a particular market, get the feedback from the consumers and if any then do
modification on it and then finally launch in whole market.
Author has mentioned that a business plan must not be albatross that hangs around
the neck of entrepreneurial team but it must be a call for action. Risk Management
is the key to reward of the venture and mitigate the risk.
So, the business plan must demonstrate mastery of the entire process starting from
selecting the right team, identifying the opportunity, the context and the risk
management.
Conclusion
As the author is a professor of Business Administration at the Harvard Business
School in Boston, Massachusetts and closely connected with more than 50
entrepreneurial ventures and written more than 100 cases and notes. After reading
this article we found that these are the basic thing for any successful venture/
enterprise. These are the strong base of any business plan which ultimately goes to
organization to achieve its goal without any much effort. If any of the factors are
lacking then it will be difficult for the organization to run the business smoothly.
Probable outcome came as a result are lack of information which lead to higher cost
of inputs (raw materials, consultancy, etc), not effective utilization of resources, lack
in sale as not aware about what is happening in the market/ outdated technology
and if risk is not minimized then heavy losses in production, rework and so many
things will happen which ultimately results in loss in business.

Bibliography
Sahlman, W. A. (1997). How to write a great business plan. Harvard business
review, 75(4), 98-109.