Name, title, company, website
Don Rainey, General Partner, Grotech Ventures
Describe your business
25 year-old venture capital firm focused on early-stage IT companies
Do you have a written business plan?
We have a business plan to guide our investment strategy and often ask our portfolio execs to do the same - though not always and just as a 1st step. Because, while the planning process is invaluable, the plan created will be broken faster than a March Madness bracket sheet after day one. It’s inevitable that unexpected events will change the future, requiring major course corrections. But, the thought process involved in considering the progression is critical for preparing to meet the challenges ahead. When a business plan isn’t required, we look for a task-oriented view as described below.
If you have a business plan, do you refer to it often?
Most businesses, successful or otherwise, don’t resemble the founders’ original conception or plan with any great fidelity. But, a thoughtful, detailed strategy will better prepare the author to make those course corrections since they’ve already deliberated as many alternatives as time allowed.
In addition to a plan, as a venture capitalist, I ask startups to give me a project/task oriented view of the first 100 days after funding. This view is better than a business plan for my purposes and infinitely more useful for the entrepreneurs. Do they know what needs to be done? Are they aware of the steps to accomplish that?
What I need to know is - what management knows and doesn’t know within its growth plans. I need to know if they’re ready for the challenges ahead. To find out, I assess how thoughtful they are about possibilities and potential responses. It used to be that a business plan was the best way to reflect that thoughtfulness. It isn’t the best way any longer.
The task oriented approach has another material advantage over its narrative counterpart in that it is inherently more organic and interactive. The impact of an identified task taking longer than expected upon other tasks tends to be more obvious. By the same token, the implication of adding new tasks is clearer. New, unanticipated tasks tend to impact all current and future tasks, for example, and understanding the future ramifications of change in real time is critical to running a business. In the same vein, a narrative business plan document wouldn't make any sense to use or edit in this fashion.
Advice
- So do we keep the business plan to prepare an entrepreneur for change? No, we should change it. A next generation business plan should not be static. It should look more like a GANTT chart than a Word doc or Excel spreadsheet, and it should be a collaborative, living document.
- Create a new tool for growing a business that has cumulative value for the time invested while providing immediate insights into past, present and future business operations. Every business decision has both intended and unintended consequences. An interactive business planning tool can allow an operator to better understand consequences.