A Business Plan Should be a Process of Discovery
William Sahlman: Without overconfidence, I’m convinced entrepreneurship wouldn’t take place.
William Sahlman is an entrepreneur and professor. His research focuses on the investment and financing decisions made in entrepreneurial ventures at all stages in their development.
Sahlman has written numerous articles on topics including entrepreneurial management, venture capital and private equity, deal structuring, and the role of entrepreneurship in the global economy. He has published over 150 case studies on entrepreneurial ventures around the world.
Sahlman is Senior Associate Dean for External Relations at Harvard University. He was co-chair of the Entrepreneurial Management, Senior Associate Dean, Director of Publishing Activities, and chairman of the board for Harvard Business School Publishing Corporation.
I’ve read probably 5,000 business plans at this point, and I have no idea whether it’s 10,000 or 3,000, it’s a lot of business plans. What I know is, only three or four companies have actually met their plan.
So the first thing I know is that people are overconfident. And in fact, without overconfidence, I’m convinced entrepreneurship wouldn’t take place. Now, to survive overconfidence, you actually have to believe and be on a path to find the right solution, to serving customers at a profit.
So these things are discovery processes. They’re about not knowing exactly how the market is going to evolve, and searching for tangential markets or places where they can create growth options. And so, the way I’ve come to think of it is just really a series of structured experiments, a process of discovery, a process of learning as you go and adjusting, modifying the people who are working with you, modifying the resources that you bring to bear on the opportunity.
So it’s a very, very interesting process, not about being able to predict perfectly, but rather about being able to find opportunity.
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