Updating the Classic Business Plan

Last Updated Oct 10, 2008 1:56 PM EDT

What makes a great business plan? Powerful PowerPoints? Pivoting Spreadsheets?

According to Harvard Business School professor William Sahlman, who wrote a classic work on business plans, it all comes down to one thing: People. Says Sahlman in an interview with yours truly on HBS Working Knowledge:

"When there is great uncertainty in the market, investors become quite risk averse. They will only back proven entrepreneurs with truly compelling ideas. People make the numbers, not conversely. So, I still think the people making the forecasts are more important than the numbers themselves."
Some more tips for business plan writers:

Short and Simple. "I have seen compelling business plans in the form of a few PowerPoint slides, a couple of scribbled pages, and a brief video," Sahlman says. "What matters is having all the required ingredients (or a road map for getting them), not the exact form of communication."

Encourage Investment From Customers. The best money comes from potential customers, not venture capitalists.

Tough Times Present Opportunities. Yes, this is a difficult environment for start-ups, but it also likely means you will have fewer competitors competing for resources.

Think Global. "We live in a world of democratized access to ideas, human capital, and mone," Sahlman says. "There are fabulous global ventures being started in every corner of the globe. These ventures can raise money locally or globally. They can disperse talent in many countries."

What do you think are the key ingredients of a business plan? Do you have a favorite format? How do you emphasize the people behind the pitch?

  • Sean Silverthorne

    Sean Silverthorne is the editor of HBS Working Knowledge, which provides a first look at the research and ideas of Harvard Business School faculty. Working Knowledge, which won a Webby award in 2007, currently records 4 million unique visitors a year. He has been with HBS since 2001.

    Silverthorne has 28 years experience in print and online journalism. Before arriving at HBS, he was a senior editor at CNET and executive editor of ZDNET News. While at At Ziff-Davis, Silverthorne also worked on the daily technology TV show The Site, and was a senior editor at PC Week Inside, which chronicled the business of the technology industry. He has held several reporting and editing roles on a variety of newspapers, and was Investor Business Daily's first journalist based in Silicon Valley.