How long does it take to write a business plan?
Over on LinkedIn, someone asked how long it should take to write a 30 page business plan.
My response:
I’ve seen 3 major efforts at writing a business plan. All plans were being used to pitch to venture capitalists. One entrepreneur was asking for $100,000, another was asking for $500,000, and another was asking for $50,000.
The first effort I saw took 6 months. This was for a web startup. The process was drawn out because the entrepreneur was facing a fluid situation. New information was coming in on an almost daily basis. The competitive landscape was changing quickly. And also, the entrepreneur was learning a lot about how to run a startup, how to pitch to VCs, and how much money would be needed.
Really, for web startups, or any startup facing a fluid situation, I think it is normal to always be working on the business plan. You re-write it every week. You re-write it after every pitch, based on the feedback you got from the last VCs, and then you re-write it again when you are about to do a new pitch, as you want to spin it in a way that you know the next VCs are going to like. If you know the next VC you are going to meet with is more interested in iPhone/smart-phone apps than in web apps, then you emphasize all the ways that your idea has smart-phone potential. You de-emphasize the web app potential.
I did see one business plan put together by a very experienced consultant, a veteran of the tech industry. He was writing it for his client, who was a younger and less experienced entrepreneur. The industry veteran took 3 weeks to write it and included multiple scenarios, detailed in various Excel spreadsheets. It was an impressive effort. It almost sounded believable, despite the large number of guesses that needed to be made about how web usage would evolve.
The last startup I worked on, the “project manager” worked on the business plan almost full time. Raising money was his main job. He faced a profound, fundamental problem, in that he did not really believe in the project. He fell into a bi-polar cycle of sometimes being optimistic and other times being pessimistic. During each pessimistic trough, he would re-write the plan considerably, or at least come up with entirely new slogans to pitch it with. This went on for over 6 months.