Steve Brotman interview: Why you need a plan.

Steve Brotman is a Managing Director of Greenhill & Co., and co-founder and co-head of Greenhill SAVP, a fund that invests in early-stage technology and information services companies. Steve currently sits on the board of four companies and the MIT Enterprise Forum’s New York chapter. Steve founded AdOne Classified Network, one of the nation’s leading classified ad Web sites, which was acquired by Hearst, Scripps, and Advance-Newhouse. Steve is a graduate of Duke University and has a joint JD/MBA from Washington University.

UpStart: “In what ways do you think it benefits a startup team to go through the process of developing a business plan?”

Steve Brotman: “A business without a plan is like a boat without a rudder. You’ve got to have a plan! Developing that plan is the critical first step of business creation. It commits you and your team to an explicit strategy and approach. It ensures that your founding team is aligned behind common goals. It defines both what you will do, and what you won’t do. And it establishes priorities, so startups focus time and resources on what’s most critical for their success. Finally, it allows founders to communicate their vision to investors, advisors, employees, vendors and partners. That doesn’t mean the plan can’t or won’t change. So be flexible, and when a major change needs to happen, circle the wagons, and put together a new plan.”

UpStart: “Would you ever invest in a company without a business plan?”

Steve Brotman: “It’s doubtful. In the earliest stages of a company, founders start with the equivalent of an idea on the back of a napkin. But every startup needs help, even if that’s just from the landlord and lawyer. Getting that help demands more than just what’s on the napkin—it requires a business plan. That said, some entrepreneurs go overboard on their plans and projections, and prefer to write about their plans versus doing something about them. That’s not what a plan is about. The goal is uniting your team behind some shared vision and objectives, and how you will likely meet those objectives, and having some document to show parties you’d like to bring on board that will increase the likelihood of your venture’s success.”

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One Response to Steve Brotman interview: Why you need a plan.

  1. I want to add support to Steve’s advice about a plan having the right level of detail for the situation and the need to focus resources on highest priority activities. We see this as absolutely critical as we mentor and advise our many entrepreneur founder teams, including investors, strategic partners, and advisors. Often they get easily distracted when they should use scarce resources and time to eliminate the uncertainty that will prevent success.

    First time entrepreneurs in particular often look past the need to first size their market as a large or small opportunity. Once this is clearly understood they need to do the critical next step of completing the killer experiment, prototype, customer validation, or other item that is their key first milestone. For example, it makes no sense to have a detailed regulatory approval plan if the you don’t have data saying a new compound works for a good animal model. When an entrepreneur eliminates their primary source of uncertainty they prove their skill, increase company value, and they can then raise more money for reaching the next critical milestone.

    Founders also need to be paranoid about listening carefully for the realities about what they fear the most. Don’t look for top level affirmation and then try to sell investors or customers about what proof you found on the web. When a founder does this they are failing to listen to the market and investors. To put it another way, if you are not getting the 3 o’clock wake ups about what you are discovering then you are not listening carefully enough to set or adjust your priorities.

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