An economy of virtualities

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AN ECONOMY OF VIRTUALITIES.
A Brief History of Business Plan Guidebooks in the United States (1970-2010)
Martin Giraudeau
London School of Economics & Political Science
FIRST DRAFT – Please do not circulate without author’s permission.
Abstract:
Business plans have been omnipresent in the world of entrepreneurship – if not beyond –
since the early eighties. The rapid emergence and survival of this market device on the
market for entrepreneurial finance, over a period when planning has undergone harsh
critiques, is a paradox that this paper aims to explain. Thanks to the qualitative,
longitudinal study of a rich corpus of business plan guidebooks published in English since
1970, we show that business plans may be considered as financial virtualities, thanks to
which market actors – i.e. entrepreneurs and their funders – are able to coordinate and
eventually agree on business ventures. But we also demonstrate that, designed to act as
performative management devices, they are also meant to help entrepreneurs turn their
projects into reality. Because according to business planning norms a good plan is a prerealized plan, the business plan indeed appears less as a predefined constraint on
entrepreneurial action, than as a driver of entrepreneurial work. This ability of the
business plan to accompany and even foster action rather than frame it explains its
proliferation in liberal economies.
1
“The business plan is dead” proclaimed a Silicon Valley entrepreneur in 2008
(Wofford, 2008). No other statement could have made his fellow entrepreneurs happier.
The preparation of a business plan is indeed, for most of them, a tedious task. Complying
with the typical business plan formats requires hard work, from the writing of a legible
executive summary, to the compilation of all required supporting documents, via the clear
description of the product or service the future company wants to supply, the
presentation of a convincing study of its market, the outlining of its human and legal
organization, and the reasonable translation of all this in budgeted income statement,
balance sheet and cash flow statement. Coming up with a business plan is a costly
“investment in forms” (Thévenot, 1986), yielding returns that are so uncertain that one
may reasonably ask: “why do we waste time creating detailed business plans?” (Wofford,
2008: 12).
Financiers, for whom these plans are generally devised, actually tend to agree
with this point of view. This is at least what another book suggested in 2002, thanks to a
most straightforward advice: “Burn your business plan!” (Gumpert, 2002). Its author, a
former journalist who wrote a few best-selling business plan guidebooks in the eighties
and nineties, surveyed some fourty American venture capitalists and concluded from their
statements that business plans had to be forgotten about, due to their incompatibility with
the “real world” (Gumpert, 2002: 12). Present-day markets, he said, undergo constant
changes and are characterized by “great anxiety”: no forecasting or planning is allowed
anymore. In such conditions, “other means of inspiring confidence in tentative investors”
must be sought (Gumpert, 2002: 5). The idea, especially, is to “prove the concept” of the
new business, not on paper anymore but rather by getting first, actual customers, making
a certain number of first sales, and then only eventually asking for extrennal funding. The
business plan, if ever it ends up being prepared, must follow the business rather than
precede it.
Critiques of business plans thus mainly attack them for their lack of grasp on
“reality”: they condemn, in short, their “fictiveness”. This argument, which is made
extremely explicit in the two mentioned books, has by far been the most common one
over the past decade, and its origins are easily traceable: it indeed started going strong
during the “dot-com bubble”, that inflated progressively from 1998, burst suddenly in the
spring of 2000 in the United States (Anonyme, 2000)1, and then again a little later in
No proper history of the dot-com bubble has been published yet. For some interesting factual and analytic
elements, see for instance: Kindleberger, 2005; Lowenstein, 2004; and Goldfarb, Kirsch & Miller, 2006.
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Europe (Andrews, 2001). Newspaper articles started coming out complaining, for
example, that “in the internet rat race, greater value [seemed] to be put on devising the
next business plan than on making it work” (Caruso, 1999). That kind of plan was thus
described as disconnected from market reality and therefore useless2 or, even worse,
responsible for the crisis – as if its cloudiness had generated the bubble, by making
investors believe in a non-grounded, fictive value of firms, before crashing back down
painfully to their “fundamental” and objective value when the illusion finally dissipated 3.
We would thus have gone, for many companies, and because of business plans, “from big
idea to big bust” (Sorokin, 2000), after what the available funds, coming back to earth,
would have been directed to more “realistic”, or even “real” projects, considered through
their existing activities rather than through plans (Altman, 2001).
However problematic the relationship between plans and “reality” may be, one
must however admit that business plans carry on thriving, as is suggested by their
persistant use in new venture formation. It is obviously difficult to measure precisely the
number of plans that is being produced nowadays, but a low estimation of this number
suggests that, in pre- as in post-dot-com America, a business plan was and is being written
for more than half of all new high-growth companies (Gumpert & Lange, 2003; Shuman,
Shaw & Sussman, 1985). But the phenomenon is not limited to the United States, nor to
such risky ventures. Some authors consider, based on a quick calculation, that more than
ten million business plans are written every year throughout the world (Karlsson &
Honig, 2009). Various reasons may explain such impressive numbers, including, first of
all, the general increase, over the last two to three decades, in the statistics of new
business formation, both in developed and developing economies4, as a joint
A humorous but oft-quoted and rather telling version of this critique may be found in the 30th episode of the
animated series South Park, entitled “Gnomes” and originally broadcast on December 16 th, 1998. Mysterious gnomes
are seen stealing underpants from the bedroom cupboard of one of the series’ kid-heroes. Questionned about the
reason for their strange behaviour, the gnomes explain their “business plan”, thanks to a PowerPoint slide that says:
“Phase 1: Collect underpants. Phase 2: ?. Phase 3: Profit”. The indeterminacy of the intermediate phase, in between
the enterprise’s starting point and the sudden appearance of profits, highlights the crucial issue of the realization of
business plans, however new and clever their core idea may be. The credibility of the stated results is thus completely
shattered. A similar ironical view on business plans may be found in the title of a management guidebook dating
back to the same period and made for the general public: If You Want to Make God Really Laugh, Show Him Your
Business Plan (Gibbons, 1999).
2
On this opposition of a “real” fundamental value and “fictive” valuation, see: Orléan, 2005 and Walter & Brian,
2007. On the meaningfulness of the “financial bubbles” metaphore, see notably Carruthers, 2009, as well – more
generally – as Sloterdijk, 2002.
3
An indication of this phenomenon may be found in the fact that broad international indicators, that didn’t exist
until now, are currently being designed for firm demography, for instance at the OECD. New venture formation has
however been documented for Europe since the early nineties, and the numbers confirm the said, growth trend (see,
e.g., Schror, 2007).
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consequence of increased unemployment rates, favourable public policies and, more
generally, the rise of a liberal ideology promoting the emergence of a “creative class”
(Florida, 2002). More directly, business plan education as thrived, be it as a part of public
policy (Giraudeau, 2007; 2009) or of general business education: in 2009, for instance,
business planning courses were provided in seventy eight of the hundred best-ranked
American universities (Karlsson & Honig, 2009). For these reasons, business plans have
become commonplace in the world of entrepreneurship. And they have even extended
their reach outside of this specific world. Even if one decides to consider as secondary
such mentions as those of the “business plan for the soul” (Henry, 2003), the “business
plan for the body” (Karas, 2001), or the “business plan for the couple” (Allvine & Larson,
2003) that suggest the concept’s extension to mental, physical and social life, it is clear
that the business plan has become a well know device outside of the world of
entrepreneurship. It has for instance been the object of intense public talk – including in
the press, as evidenced in Figure 15 – both after the bubble burst… and also long before
it emerged, which suggests that business plans were born earlier than is usually supposed 6.
The aim of this paper is to account both for this early birth and the current survival of
business plans, thanks to the historical analysis of one of the main vehicles of business
planning methods and templates: business plan guidebooks.
The parallel evolution of public mention of the phrase « business model » – a twin sister of business plans that focuses
less on the technical device than on the way a company structures its relations to markets – is accounted for nicely in
Ghaziani & Ventresca, 2005.
5
For instance, the very rich and well structured « Business Plan Archive », that was started in 2002 by business
historian David Kirsch, presents itself as “a research database for scholars and students interested in studying hightech entrepreneurship in the Dot Com Era and beyond” (http://www.businessplanarchive.org/ – my underlining).
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160
140
120
100
80
60
40
20
Figure 1 :
2006
2004
2002
2000
1998
1996
1994
1992
1990
1988
1986
1984
1982
1980
1978
1976
1974
1972
1970
0
Evolution of the number of yearly mentions of the phrase “business plan”
in the New York Times (1970-2006)
The tension that surrounds business plans – because they are both omnipresent
and intensely criticized – is obvious in present debates, as we have just seen, but it also
goes far beyond them. The status of planned action in modern economies was indeed a
foundational question for the social sciences, and has been continuously debated in
discussions over the nature of liberalism and capitalism. The relations between planning
and liberalism are indeed problematic, to begin with. Taken literally, the Austrian
economists’ stance on planning, for instance, goes much further than the critique of State
“planism”, since any form of plan may be seen, through their eyes, as a constraint on the
entrepreneur in his efforts to stick to the market (Hayek, 1944; Mises, 1947; 1952). The
plan is a set of cuffs on the invisible hand. This, of course, fits well with the critical
discourse on the death of the business plan, as well as of other forms of business and
economic planning, such as, for instance, State planning (Scott, 1998), strategic planning
(Mintzberg, 1994), or operational planning (Boltanski & Chiapello, 1999) or more
specifically budgeting (Hope & Fraser, 2003): the rise of liberalism in western economies
over the past three decades would have caused the decline of planning in its various
guises. But such a position is of little help – quite on the contrary! – to help us make sense
of the first growing and then at least continued presence of business plans in the hands of
entrepreneurs since the early eighties. How can one account for the durable presence of
such an antiliberal tool as a plan in the hands of the heroes of liberalism that
entrepreneurs are supposed to be?
On the other hand, modern western capitalism was originally characterized,
according to Max Weber, by the rise of instrumental rationality, in particular on the part
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of entrepreneurs, and instrumental rationality, precisely, was consubstantial with planning,
as was well summarized by Raymond Aron, who defined it as “an agency based on the
mobilization of available resources according to a set plan” (Aron, 1967: 555 – my
translation). “It is of course one of the characteristics of private capitalist economies to be
rationalised on the basis of strict accounting calculation and to be coldly planned towards
set economic results – which differentiates it from the day-to-day life of the peasant, the
routine of craftsmanship, and adventurous capitalism, that was indexed on political
uncertainties and irrational speculation” (Weber, 2003: 61). If planning is contradictory
with liberalism, it may well be essential to capitalism, and the question is therefore that of
the variable forms plans may take in order to survive, by allowing entrepreneurs to conduct
“actions that fit” (Thévenot, 1990) with the economic contexts of liberal capitalist
economies. Weber himself suggested this when mentioning the existence of weaker, i.e.
less “cold” forms of rationality: “the absence of calculation or precise evaluation, the use
of mere estimation or of simply conventional or traditional processes may still be found
today in all kinds of capitalist operations, in all the cases where the circumstances do not
require precise calculation. But these are just questions over the degree of rationality of
capitalist gain” (Weber, 1996: 495). Boltanski and Chiapello, trying to complement Weber
by proposing a typology of the spirits of capitalism, also left the door open for such an
enquiry into the emergence of specific forms of planning. If more flexible forms of
organizing of the future called “projects” are at the centre of the “new spirit of
capitalism”, then one may wonder how project-like business plans have become, and
whether planning hasn’t thus just been hybridised with projection7.
In order to address this question, we propose here to consider entrepreneurial
finance as a market for virtualities. Investors, be they venture capitalists, business angels,
or any other kind of financial institutions investing in new or rapidly developing ventures,
spend their money on companies whose existence and profitability have yet to become
empirically observable. The valuation of new ventures raises some classical problems.
Moral hazard is of course the first one of these.8 For strategic reasons, or just out of
forgetfulness, the entrepreneur may keep from disclosing part of the information he has
to the people from whom he expects to raise capital. Another classical evaluation
7
For a symmetrical study of the shifting of project management towards business planning, cf. Giraudeau, 2008.
Information problems in venture capital investment have long been noticed by economists, be it when applying
decision theory to venture capital decision making (Meade, 1978), in the study of the dynamics of borrower-lender
relationships (Cooper & Carleton, 1979), and in the appraisal of the contribution of financial intermediation to the
resolution of these problems (Chan, 1983). Efforts to provide models to describe these relationships have lead, more
recently, to their description through the prisoner’s dilemma (Cable & Shane, 1997) and agency theory (Kaplan &
Stromberg, 2001; 2003).
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problem is that new companies are complex “nexuses of contracts” (Williamson, 1986)
mixing heterogeneous elements that can very hardly be evaluated according to a simple
grid of criteria. Financial statements can of course provide useful information about the
initial assets, liabilities, and expenses of the business, but they do not say much about the
singular articulation of these elements in the business, about their actual use inside the
new organisation, about the evolutions presently happening in the markets the company
aims to conquer, etc. In short, the assessment of a singular business “combination,” as
Schumpeter would have put it (Schumpeter, 1911), happens to be a hard task because of
the difficulty to evaluate the quality of some elements of the business as well as of their
mix. But entrepreneurial finance is not just any market – with its moral hazard issues –
nor is it just a market for qualities or singularities (Karpik, 1989; 1996; 2010; Musselin &
Paradeise, 2002). The uncertainties market actors are confronted with on this market may
be uncertainties about full disclosure of information, or about the qualities of the new
venture, but they are also and most importantly uncertainties about the future. Investors
and entrepreneurs meet around strange pseudo-products that are in a sort of existential
twilight zone: they do exist, as plans, but they do not exist yet as operating enterprises. As
businesses, they are still virtual. How can such an uncertainty-laden market actually
function?
This paper shows that there is no straight-forward answer to this question, but
that market actors, over the years, have devised various ways to circumvent the problems
of dealing with virtualities, by proposing various tools and methods to account for the
future business and its value. To do so, they have notably relied on a specific tool: the
business plan, a “market device” (Callon, Millo & Muniesa, 2007) that has been plugged
in the entrepreneurial process. The business plan is indeed a paper or electronic
“mediating instrument” (Miller & O'Leary, 2007) designed to circulate between the
individual actors of the supply and demand sides of the market, in order to make them
meet and eventually reach an agreement. If one wishes to compare the funding of new
ventures with a market for goods, then the business plan is best compared with the
packaging of a product: it is a two dimensional pack, covered with inscriptions about the
product’s ingredients, qualities and price. But it is specific in that its readers can take part
in its writing and, most importantly, it is an empty box, which will only end up being filled
with what is promised on the cover if and once funding is actually secured. 9 The question
therefore is: how does the business plan account satisfyingly enough for the future? How
9
For a sociology of the mediation operated by packaging on markets for tangible goods, see Cochoy, 2002.
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does it reduce the uncertainties inherent to the virtuality of the companies it intends to
describe? Put bluntly: what is a good business plan?
As all entrepreneurs and venture capitalists know, answers to this question may
be found in the normative literature on business plans, and especially in business plan
guidebooks. We propose, in this paper, to follow the actors in their quest for the good
business plan, by having a look at the evolution of this literature. We will thus focus on
the forty-year history of business plan guidebooks, from their emergence in the late
1960’s until the post-dot.com times of the last ten years10. This will enable us to
emphasize the youth and fragility of present business planning norms, as well as to reveal
some of the workings of such accounts of the future.
Prologue: “The Business Plan Package”
Business plans have a long history. Merchants in Renaissance Venice prepared
anticipated balanced sheets to assess their chances of success and discuss them with
fellow merchants and bankers (Braudel, 1993). With the emergence of new types of
companies, and the separation of ownership and control, other forms of documents were
prepared. An often quoted example is that of Columbus’ request of funds to the Spanish
sovereigns for his transatlantic venture. A more recent and adequate example is that of
Pierre-Samuel Du Pont de Nemours’ written projects of 1797 and 1798, designed to
secure funding from European merchants and bankers before settling in the newly-born
United States, where his son would end up founding the Du Pont Company (Giraudeau,
forthcoming in 2010). It was not until the late 1960’s, however, that business plans
became identified objects deserving a specific name. Following the Second World War
and thanks to growing state concern about both small business and technological
innovation, a whole world of entrepreneurship started to emerge. The Small Business
Administration was created in 1953, and new types of financial institutions appeared:
venture capital firms on the one hand, and the federally supported Small Business
Investment Companies on the other hand11. Research and training in small business
management and entrepreneurship simultaneously started to develop, both in academia
Some of the guidebooks in this corpus were obtained via online second-hand bookstores, but most of them were
consulted at the Harvard Baker Library, at the MIT Dewey Library, or at the LSE Library. A chronological list of the
main business plan guidebooks published in English since 1980 is provided as an appendix at the back of this paper.
10
For a brief introduction to the history of venture capital, see Gompers, 1994 and Gompers & Lerner, 2001. On
public programmes for the funding of new ventures, see Noone & Rubel, 1970 and Leicht & Jenkins, 1998.
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and out of it (Katz, 2003; Vesper, 1993), and a new literature thus emerged to help
entrepreneurs govern their businesses12. Providing advice on how to secure funding for
new or rapidly growing businesses soon became an important matter of concern for some
of the actors of this world of entrepreneurship. By the 1970’s, hundreds of venture capital
firms and Small Business Investment Companies already existed, and already asked for
“business plans” from those who asked them for funding.
Investors, who received dozens of applications every day, were generally small
and risky companies that couldn’t afford to hire enough personnel to assess all the
business projects they received and therefore felt the need to rationalise their screening of
projects. Asking for a written proposal that could then be dealt with administratively and
discussed internally was a helpful and obvious option. There was however quite some
variability in what different investors meant when talking of “a business plan.” Some
barely expected entrepreneurs to send them a brief description of the future company,
along with basic financial projections, whilst others required longer and more narrative
documents, that would describe the proposed product or service, its market, the
entrepreneur’s curriculum, etc. Knowing what type of document investors wanted often
proved tricky for entrepreneurs, who had to ask every new investor they contacted what
his requirements were in this respect. But it was not long before consultants and
academics, who were sometimes the same persons, spotted the information problem and
sought to solve it. In 1973, for instance, a New York business information company
called Technimetrics Inc. issued a Business Plan Package (Technimetrics, 1973), which
started with brief information about the expectations of venture capitalists in terms of
return on investment, and basic examples of ratio analysis 13. The package then contained
a ten-page long standard outline for a plan, which emphasized the necessity to put
synthetic information about the financial prospects of the business at the forefront of the
plan, before going into a detailed presentation of the business and a market study, first in
a narrative way and finally thanks to pro-forma accounting statements (cf. Figure 2). It
finally provided entrepreneurs with more than thirty pages of “handy fill in the blanks
tables,” half of which were accounting tables, while the other ones were to be lists of
Kelley & Lawyer, 1949 is arguably the first guidebook on new venture formation, after those of the Starting and
Establishing series that were edited in the 1940’s by the Department of Commerce (e.g. US Bureau of Foreign and
Domestic Commerce, 1945). But a new surge in entrepreneurship guidebooks started in the 1970’s (see, for instance,
Dible, 1971; Mancuso & Baumback, 1975; Timmons, Smollen & Dingee, 1977).
12
Ratio analysis based on the financial statements of existing firms was born in the early twentieth century and, in
spite of some debates, had long been accepted by business professionals by the 1970’s (Miller & Power, 1995).
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personnel, recruitment schedules, and such. First stable formats of business plans were
starting to appear.
1.
2.
3.
4.
5.
6.
Introduction.
Proposal and use of proceeds.
Speculative features and risk factors.
Capitalization (present and pro-forma).
Ownership (present and pro-forma).
The company.
a. History, including pre-formation.
b. Products/processes/services.
c. Operations and manufacturing facilities.
d. R & D, patents and trade secrets.
e. Personnel breakdown.
f. Sales.
g. Current economics of product, etc.
h. Markets.
i. Competition.
j. Synopsis of management background and track records.
k. Synopsis of professional relationships with lawyers,
bankers and accountants.
l. Financial and management controls.
m. Analysis of prior income statements and future
projections.
n. Near-term outlook.
o. Summary
8. Appendices
a. Biographies of key personnel (should be more extensive
than synopsis above).
b. Organizational structure of company.
c. Product literature.
d. Audited financials.
e. Pro-forma p/l, cash flow, balance sheet, capital
requirements, staffing requirements, etc.
f. Analysis of comparative financial ratios of similar
public companies in your industry area.
g. Glossary of technical terms and definitions.
Figure 2 :
“Sample table of contents for typical private placement »,
in The Business Plan Package (1973).
Such formats, initially made for companies with high return on investment
prospects, soon came to be developed for more common business ventures, who sought
investments from SBICs, or even just loans from banks and state agencies. These formats
were explained more thoroughly by their authors, in order to make them accessible to
inexperienced and low qualification entrepreneurs. In 1976, the Federal Reserve Bank of
Boston for example published what seems to be the first Business Planning Guide. A
Guidebook to Help You Design, Write, and Use a Business Plan Tailored to Your Specific Business
Needs (Bangs & Osgood, 1976), which was co-authored by the bank’s Urban Affairs
manager, William R. Osgood, and David H. Bangs, coordinator of the Business
Information Center of the Southeastern New Hampshire Regional Planning Commission.
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This ninety-page long booklet was structured around the sample plan of a fictional New
Hampshire company called “Finestkind Seafood Inc.” The outline of the plan was similar to
that of the Business Plan Package, but the first synthetic pages had disappeared and the plan
was clearly divided in two part, the first one being narrative, and the second one made of
pro-forma accounting statements and ratio analysis. The business plan was here
conceived of as a means to interest investors, but also to allow entrepreneurs to assess
their businesses themselves, less from a financial standpoint than in terms of day-to-day
operations, general structure of the business, and fit with its markets. The planning
process was thus meant to become a formative period for the entrepreneurs, who had to
take a leading part in it: “YOU must do the planning / This means that you must make the time
available. (…) Others can assist you in the process, but you must do the actual planning. / If you are not
in business, but are trying to determine whether of not your business idea makes sense – or are getting
ready to get started – following the planning process outlined is the most important thing you can do. /
PLAN what’s going to happen – Then do it.”
“How a Business Plan is Read”
With the growing number of support services for entrepreneurs, some authors
even developed what they called “a systems approach to venture initiation” (Osgood & Wetzel,
1977) or considerations about “guided entrepreneurship” (Timmons, 1975)14. The idea was to
have “professional business development teams” frame entrepreneurs in the business planning
process, or at least to provide entrepreneurs with external feedback on their plans in
specifically tailored workshops. First critiques of the use of excessive framing in the
preparation and formats of business plans however started to emerge as early as the midseventies. Another paper from the Business Horizons review, which was created in 1958
with a target audience of small and medium business owners but started like many others
to publish more articles about new venture formation from the beginning of the 1970’s 15,
stated these critiques clearly. It’s author, Joseph R. Mancuso, was himself an entrepreneur,
who had founded in 1959 one of the first business “incubators” and is actually famous for
A member of faculty in management at Northeastern University, in Boston, Jeffry Timmons described in this
article the activities that were taking place in the Institute for New Enterprise Development he had participated in creating
at the university in 1972. He would, a few years later, publish an entrepreneurship guidebook that we have already
come across (Timmons, Smollen & Dingee, 1977), before co-authoring another guidebook with David Gumpert,
whom the reader will soon get to know better (Gumpert & Timmons, 1982).
14
Moreover, new magazines, specifically focused on entrepreneurship issues, started to be published in the second
half of the seventies (e. g. Entrepreneur Magazine in 1976, Inc. Magazine in 1979…).
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having coined that word (National Business Incubators Association, 2008). Less
interested than others in how complete and detailed a business plan should be, Mancuso
made interviews with venture capitalists and focused on “How a business plan is read”
(Mancuso, 1974). His conclusion was straightforward: “Most articles concerned with the writing
of business plans focus on checklists, blank forms, and sample plans. As guides, they help catch items that
might be overlooked because they force a full and balanced consideration of the many intertwined issues. To
be helpful, they must be broad in scope; but this also decreases their effectiveness for a particular reader”.
Such a reader would indeed spend on average five minutes reading a plan written in more
than five weeks, and sometimes months, and these five minutes would be devoted to the
following steps: “Step 1 – Determine the characteristics of company and industry. / Step 2 –
Determine the terms of the deal. / Step 3 – Read the balance sheet. / Step 4 – Determine the caliber of
the people in the deal. / Step 5 – Determine what is different about this deal. / Step 6 – Give the plan a
once-over-lightly”. According to Mancuso, the wise business planner therefore had better to
produce a synthetic plan that made such a quick reading possible, rather than lose time in
preparing a more systematic document16.
Such a critique was however followed by one of another type. If the planning
process wasn’t to be too formal and excessively framed, it also had to lead to more than a
quick and synthetic document. For some authors, Joseph Mancuso was “more of a
cheerleader”, who neglected the importance of thorough business planning more than was
preferable from the actual point of view of investors. This was the point of view that was
developed in 1985 by Stanley R. Rich and David E. Gumpert in their catchily entitled
book: Business Plans that Win $$$. Lessons from the MIT Enterprise Forum (Rich & Gumpert,
1987). Stanley Rich, a technology-oriented business entrepreneur and MIT graduate, was
the chairman of the MIT Enterprise Forum, that he had participated in launching in 1978
with the MIT alumni/ae associations and which was designed as a meeting place for
entrepreneurs, venture capitalists and other people interested in venture formation. Rich’s
rather dissatisfied experience in the Forum made him want to write a book to educate
Similar critiques against pre-formatted business plans also arose in more confidential spaces inside the venture
capital industry. Georges F. Doriot, for instance, who is often considered as the inventor of modern venture capital
(Ante, 2008; Gupta, 2004) and who thus contributed actively to the proliferation of business plans, wrote the
following memo to his staff just before he retired: “Looking back over the last two or three years, there is a new expression
which has arisen in the so-called “venture capital world.” When a project comes in, when a man with an idea calls on us, it seems that we
cannot wait to ask the question: Do you have a business plan? If not, why not? Where is your business plan? (…) It is fashionable. One
must have a business plan. (…) The Business Plans I see, the ones we seem to like, look so perfect that they are superficial, misleading
and ridiculous. I do know that we are all searching for slogans, for life belts, for anything which does not require hard, difficult thinking
and hard work. We are drifting into laziness and complete inability to be imaginative and constructive. We analyze worthless documents
and waste our time doing so. A computer could do the job!! I do not want to hear about the modern conception of a business plan”
(Baker Library Historical Collections Department, Harvard Business School Archives, Arch. GA 19.1: Georges F.
Doriot American Research and Development Papers (1946-1991), Box 2, Folder 17, “GFD advice and memos”).
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entrepreneurs and he asked for Gumpert’s help in order to do that. David Gumpert, a
former Wall Street Journal journalist whose parents owned a retail store and who had
always had a specific interest in small business issues, had been hired by the Harvard
Business Review in 1979 as its “small business and entrepreneurship” editor, a newly created
post. The book contained almost no fill-in-the blank tables and showed no sample
business plan. It did articulate, classically, around the various successive parts of a
business plan: “What do you want to be when you grow up?”, “What’s the user benefit and other
marketing issues”, “Selling and supporting your product”, “Product development and manufacturing”,
“What’s the management team like?”, and “Those %&*#@! Financial projections”, which
reflected the general dislike of accounting among the population of entrepreneurs. But
the book’s focus was much less on the methods and technicalities of market and
competition studies or of financial accounting than on the general impression of
credibility the business plan was meant to attain. The authors thus developed what they
called “The Rich-Gumpert evaluation system”, which aimed at summarising the expectations of
venture capitalists and other potential investors when they appraised a business plan. The
“system” emphasized two dimensions in the evaluation of plans: the “product/service status”
and the “management status”, which could be confronted in a four-by-four table
(cf. Figure 3). “First comes a qualitative assessment, based on the status of the product and the
management team (…). Thus, most desirable is what we might refer to as a ‘4/4’ – a business with a
Level 4 product and a Level 4 management team. This venture has an accepted product in a proven
market, run by a first class and fully staffed management team and is clearly the likeliest combination to
win investment funds at the lowest cost for the money. / At the other extreme is a single entrepreneur with
an unproven idea – a 1/1. This venture has barely a chance to obtain investment funds unless the founder
has a magnificent track record. All the other combinations will range between these extremes” (p. 165).
The authors insisted here on the importance of “proof” in an interesting way: the product,
the market and the team all had to be convincing and they could only be so if they
actually existed. The product had to have already met its market and the management
team had to be constituted. The business plan thus had to, first of all, describe an attested
present in order to make credible claims about the future.
13
Figure 3 :
“The Rich-Gumpert evaluation system”,
in Business Plans that Win $$$ (1985).
“A Business Plan for America”
This position, held in the mid-1980’s, however went against the general tendency
of recommendations that were made to entrepreneurs in this decade as well as in the
following one. By this time, business plans had indeed stopped to be a local tool used in
the very specific market for risky-venture finance. The tool had indeed become a symbol
for the “new economy”, and so much so that business planning was even turned into an
actual economic and social policy “programme” (Miller & Rose, 1992) to fight against the
recession. A book entitled Business Plan for America: An Entrepreneur’s Manifesto (Gevirtz,
1984) was published in 1984, which was a plea for the promotion of individual initiative
through new venture formation, in order to let the “ingenuity”, “ideas” and “desires” of the
14
American people express themselves against the forces of the “establishment”. This
“manifesto”, which called on the ideals of the founding fathers of the US and especially on
those of Benjamin Franklin, thus conceived of the business plan as the modern
technology that could make Adam Smith’s invisible hand real, with Smith’s butcher,
baker, and brewer just replaced, first, by the engineers of Silicon Valley and, then, by all
the “efficient hedonists” the American people was made of. The business plan, which allowed
for emergent relationships between finance and entrepreneurs, was to be both the symbol
and the tool for “twentieth century capitalism”, as the hammer and sickle had been those of
another ideal world. The “new spirit of capitalism” had thus found an instrument in
which to embody itself (Boltanski & Chiapello, 2005).
This celebration of business plans went along with an intense proliferation of
business plan guidebooks, that where now aimed at all types of entrepreneurs. More than
twenty of them were published in the US in the eighties, and twice as many in the
nineties. One of the first authors to propose such a guidebook was William Osgood
(Osgood, 1980), who recycled part of his material from the 1976 Business Plan Guide he
had co-authored with David Bangs, and it wasn’t long before Bangs himself published his
own guidebook, that was to be re-edited numerous times until today (Bangs, 1985). These
authors mainly focused on providing entrepreneurs with a precise format, which was first
a check-list of all the information they had to provide in the plan. The checklist also
respected the already standardised order in which this information was expected by
potential investors, and thus served as an instrument of comparability of plans the ones
against the others. The role of formats was particularly important for the accounting parts
of the business plans and new ways to enforce these formats were soon developed. As
soon as the first spreadsheet software came out, Osgood indeed issued new guidebooks
that explained how to design prospective accounting tables with these software and thus
automate part of the required computations (Osgood & Curtin, 1984; 1985; Osgood &
Maupin, 1985). Other authors relied on older tools, but all moved in the same direction of
proposing detailed and explained business plan formats. It was even the case of Joseph
Mancuso who, in spite of his previous critiques against business plan formats, published
How to Prepare and Present a Business Plan in 1983, and How to write a winning business plan just
two years later, both of which provided entrepreneurs with predefined plan structures
(Mancuso, 1983; 1985). David Gumpert, who had then started working for Inc. magazine,
was asked by the magazine’s editor to write a new business plan guidebook aimed at a
larger public than the one he had co-authored with Rich, and he thus also started to focus
less on the provision of proofs of existence of the business than on the business plan
format itself (Gumpert, 1990). The writing of business plans was thus mainly a matter of
filling in the blanks of a pre-established document structure.
15
The titles of business plan guidebooks that were published over the years are
quite telling about this delegation of part of the business planning process to the paper
and computer technologies embedded in the guidebooks. Most of them, of course,
claimed to propose methods for the production of a “successful business plan”, a “winning
business plan”, a “powerful business plan”, “your best ever business plan”, or even “a great business
plan,” when it wasn’t simply “the perfect business plan” (Abrams, 2003; Freemantle, 1994;
Fullen & Podmoroff, 2006; Lasher, 1994; Sutton, 2005). This efficiency of the plan took,
in some other titles, a more explicit form: the good business plan was sometimes the one
“that others [would] want to read and invest in”, that would enable entrepreneurs “to win [their]
investor’s confidence”, made for “attracting equity investors” or “raising venture capital” (Schilit,
1990; Schwetje & Vaseghi, 2007; Shepherd & Douglas, 1998; Sutton, 2005). Elsewhere,
the good business plan was the one who made it possible primarily to attain internal goals
for the business: it was a business plan “for profitability,” or more generally “the start of
something big”: “start with a vision, build a company” said another title (Hargrave, 1999; Horan,
1998; Johnson, 1996; Ward, 1987). But business plans were also recognised as having
some dark sides: business planning required rather thorough writing and computation
from entrepreneurs, which made it seem like a complicated or at least fastidious task.
Business plan guidebooks therefore insisted on how they could make things easier for the
writers of business plans. They would explain Business Plans for Dummies or The ABC’s of
writing winning business plans and claim that thanks to them the writing of business plans had
“never been easier” (Adams, 1998; Tiffany & Peterson, 2001). The length of the business
planning process was itself a major issue and guidebooks insisted on their ability to reduce
it thanks to methods “in 30 days”, “in 15 days”, “in 60 minutes or less…” or even “in no time”
with the “instant business plan” (Berle & Kirschner, 1994; Fiore, 2005; Fullen, 2005; Luther,
1987; Patsula, 2000)! These miraculous methods were said to be “easy-to-follow”, structured
around a limited number of “steps” – often seven! – (1996; Berle & Kirschner, 1994; Coke,
2002; Covello & Hazelgren, 1994; Duggan, 1985; Freemantle, 1994; Kuebler, 1993; Lacy,
2007; Maltzman & Benshoof, 2003) and relied heavily on the use of workbooks, as well as
on a growing number of spreadsheets and software when, from the mid-1990’s, the use of
computers had been democratized. A real market for business planning tools and
methods had developed, that gave birth to a whole generation of newly equipped
entrepreneurs.
“The definitive business plan”
The growth of this market led to evolutions in the contents of business plan
guidebooks. Even though most of the titles of their books sounded alike, authors indeed
16
progressively tried to differentiate from one another. Differentiation went in various and
sometimes opposite directions, depending mainly on the type of entrepreneurs guidebook
authors were aiming to sell their tools and methods to. Some thus tried to simplify as
much as possible the business planning process. The One Page Business Plan. The Fastest,
Easiest Way to Write a Business Plan (Horan, 1998) was first developed by its author,
previously a senior financial executive in various large firm, as a consultancy tool that he
ended up publishing in 1998. The aim of the book was to facilitate the writing process,
i. e. to help entrepreneurs design their plans on paper, in order to enable then to assess
and improve their projects, especially in a marketing perspective – so that they could
become understandable to someone else. “Things get clearer when you write. Of course at first the
process can feel very awkward, and the results seem poor and anything but clear. But given time and
patience, the process results in a connection of the mind with the reality of the paper. Thoughts begin to
develop into images. Images turn into keywords and short phrases. An outline begins to emerge, and the
clarity builds” (p. 21). In order to make this possible, The One Page Business Plan proposed
around a hundred preformatted pages, where precise writing exercises where given to
entrepreneurs, quite in the same way as in writing exercise-books for school children. A
good example of these exercises was the one that aimed at facilitating the production of
an initial “vision statement” for the new business (cf. Figure 4). The entrepreneur was asked
to state his general vision of the future of his company in three different ways: first, in a
pre-ascribed fill-in-the-blanks format, second “in [his] own words”, and third in a “wildly
optimistic, no limits, outrageous” way. With the additional help of a dozen of examples of
vision statements given in the book17, the entrepreneur could thus phrase and rephrase
his statement without being afraid of confronting a white page. Besides writing,
(ac)counting was also to be simplified and, like many other guidebooks since the midnineties, The One Page Business Plan was accompanied by a toolkit CD containing Microsoft
Excel spreadsheets with, on the one hand, an empty monthly profit and loss statement
for one year – joint with predefined charts to show the evolution of sales, overhead and
profit before tax, as well as “key financial percentages” (cost of goods sold, gross profit,
etc.) – and, on the other hand, a more synthetic version of the P&L made to automatically
generate a breakeven chart (cf. Figure 5). The simplified representation of the future
business had been advocated since the early days of business planning guidebooks, who
already referred, although rapidly, to such tools as ratios, charts, and synthetic statements,
E. g. “Create a network of Creativity Cafes around the world that are live and cyberspace networking salons featuring educational
entertainment and electronic cyber theatre. A fun place where people gather for play and work; where creative people, using the marriage of
art and state-of-the-art technology learn from each other and have a forum for showcasing their work” (p. 34) or “Build a successful local
business furniture company that specializes in providing competitively priced furniture with superior service to companies with 10 to 50
employees” (p. 35).
17
17
but didn’t go as far in equipping entrepreneurs with automated or quasi-automated
methods to produce these.
Figure 4 :
Figure 5 :
“Crafting Your Vision Statement” page in The One Page Business Plan (1997).
“Sample breakeven chart” worksheet in The One Page Business Plan (1997).
Providing simplified tools for the written and charted visualization of venture
projects was the intention of many a guidebook, and this proved to be a source of
commercial success for them, the One Page Business Plan for instance ending up as an
Amazon.com bestseller, even though it wasn’t published by a well established editor.
Other guidebooks however opted for more sophistication. First published in 1986 and re18
edited a number of times, Anatomy of a Business Plan (Pinson & Jinnett, 1986) was thus a
three-hundred page long A4 volume with extremely detailed advice and worksheets on all
the sections of a business plan. This guidebook emphasized precision and depth of
analysis much more than clear synthesis. It was not until the late nineties, however, that a
first up-market business plan guidebook emerged, aimed at entrepreneurs with a high
level of business education and experience. By that time, entrepreneurship research and
education had developed all over the world, and business school students could use a
more academic business plan guidebook. The Definitive Business Plan. The Fast Track to
Intelligent Business Planning for Executives and Entrepreneurs (Stutely, 1999), with its telling title
that places it at the top of intellectual hierarchy, was first published in 1999 by Richard
Stutely, an author whose background was for once not in entrepreneurship, journalism or
management, but in finance18. The book, with a classy black cover and a foreword by Sir
Paul Judge, is full of quotes on strategy by great men, and refers more than any other one
to the academic tradition, be it in a humoristic way when, in the final sample plan it
exhibits, it describes a management team made of Machiavelli – the CEO, who “brings
strategic insight which will help the company to gain market share…” –, Karl Marx, Adam Smith,
and Descartes (p. 308). But the academic ingredients of the guidebook are more than a
matter of style. The advice given to entrepreneurs is indeed much more sophisticated
than in other guidebooks. Break-even analysis, for instance, is not only explained on the
basis of the simple straight-line method, and no software is provided to which
entrepreneurs could delegate part of their work. More-over, some elements of economic
theory are introduced in the advice given to entrepreneurs, with a notable suggestion on
how to introduce marginal analysis in the plan, based on the abstract example of a
coconut seller – i. e. some sort of a Robinson Crusoe on the market (cf. Figure 6). “You
certainly want to think about marginal analysis when you plan and run your business. The calculations
are usually more complex than the example here, but the conclusions will hit you like a coconut falling
from the palm tree. Remember that average costs are not static. Watch for them to jump about when the
stall owner suddenly increases the rent. It is a rare – and advanced – business plan that includes much
marginal analysis. Nevertheless, you may find it useful to say a word or two about marginal costs, not
least to demonstrate that you understand costs and prices – and that you have them well under
control” (p. 238). The microeconomics of production attempt, in a late effort, to have a
performative effect on business planning practices19. But the caution of the author in
Richard Stutely, a British economist, held management or director positions at NatWest and at HM Treasury,
before becoming senior economist in two American investment banks, and later chief economist in a commercial
bank. He is the author of various guidebooks on financial decision-making.
18
The desired convergence of business planning practices with the micro-economics of production was also
promoted at the same time, but in the reverse way, as a means to give empirical grounds to the teaching of
economics (cf. Deboer, 1998).
19
19
proposing this “complex” method is telling as to the actual distance between empirical
business planning methods, based on discreet accounting data, and the computational
requirements of micro-economics.
Figure 6 :
Marginal analysis chart in The Definitive Business Plan (1999)
However sophisticated economic and accounting methods may be, they are not
the only component of Stutely’s “scientific method” for business planning. Another
major element of this method is the empirical grounding of the assumptions made in the
plan. This is obvious when one looks at the “Ten reasons why business plans fail at first glance: /
1. The presentation is too scruffy or to slick – it feels false. / 2. The text is too long, with too many
generalizations, too much waffle. / 3. The text is too short, too weak and vague. / 4. Whatever the
length, there are not enough hard facts and details. / 5. There are errors of fact (a major sin). /
6. Specific omissions suggest that vital skills, resources or knowledge are lacking. / 7. There is not
enough “what-if? » analysis? (What if sales drop 10 % ? Increase 10% if interest rates rise onepercentage-point ?) / 8. The financial projections are unreasonably optimistic, especially if sales or cash
flow improve unrealistically smoothly – without seasonal variation or downward blips. / 9. The
plans are obviously produced to raise finance, not for running the business. / 10. The plan was
produced by professional consultants, raising doubt about the management’s own skills” (p. 259 –
my underlining). The errors to avoid are all related to unsatisfying references to the reality
underlying the plan. Put shortly, the main recommendation is: “You have to prove that your
plan will work” (p. 279). And, just as Rich and Gumpert had in the mid-eighties, many
other guidebooks insist on this same necessary empirical grounding of business plans. “In
writing a business plan, your ‘thesis’ isn’t a complex theoretical statement. Instead, it is a simple thought:
‘My idea for a (insert your concept here) business is a profitable one’. Your research goal is to prove this
20
statement accurate. If you cannot, then you need to rethink your idea and revise it” (Fullen &
Podmoroff, 2006: 175). But how can one prove the future success of a new business?
And how does this grounding articulate, in the plan, with accounting and – eventually –
economic methods of formalization?
Epilogue: “The Business Plan is Dead”
The main requirement, as is obvious here, is for the entrepreneur to undertake
“research.” As Stutely puts it, it is to “know [one]self” and “know the world”: “If you got this right,
it is a downhill ride to business success. Now you can have fun in converting the effort to date into
strategy” (p. 84). In this perspective, the market study is the part of the plan that ends up
being “the real ‘meat-and-potatoes’ of [the] business plan” (Fullen & Podmoroff, 2006, p. 71)
i. e. the main source for data, and especially numerical data, that is then to be worked
upon in order to produce pro-forma financial statements. But how may this data be used
to plan ahead? The ABC’s of Writing Winning Business Plans (Sutton, 2005) provides an
answer to this question: “If you are writing your plan for a new business venture, you really have no
choice but to extrapolate. Yet that extrapolation will still be based on real data. Any number you put
into your business plan needs to be backed up by research and/or expertise. (…) / Guessing can kill a
plan. (…) The minute any of your numbers are called into question, your whole plan is called into
question. Remember that financial readers are trying to decide whether or not they can trust your business
to return their money. If they can’t trust your figures, they can’t trust you” (p. 117). There is no such
thing, here, as mere “trust in numbers” (Porter, 1995): all numerical data must be “backedup,” and the practice of “top-down forecasting” itself is meant to respect that rule, by relying
on factual assumptions. “Top-down forecasting is planning for the future with the end in mind. It
starts with your goals for three years out and backtracks the steps it will take to go there. You start with
the big picture – the industry – and your goals within it. With your market share goal, you can predict
your revenue. From there, you work your way down the table, filling in exact numbers where you can and
making your best predictions where you can’t. Still, there are no guesses. Even the advertising section (one
of the most variable sections of your projection) can be worked out logically. You know where you stand
with the competition and the industry norms. So you know if you will need to spend more or less than the
norm in order to increase your piece of the pie. How much more is a little murkier, but your marketing
section analysis should be able to guide you. / Top down forecasting allows you to work your goals into
your company’s expectations of the future. It also allows for some spin, but keep it real” (pp. 38-39).
“Keeping it real” is a methodological requirement that should be respected
during the planning process, but it is also a requirement in terms of presentation of the
plan, where references should be made to all data that may help justify the argument, and
where this data should actually be presented, in order to allow for verification by the
21
readers of the plan. Such factual information is indeed expected in the “Supporting
Documents: (…) These are the records that back up the statements and decisions made in the three main
parts of your business plan [i. e. the executive summary, the narrative part, and the financials]. As you
are compiling the first three sections, it is a good idea to keep a separate list of the supporting documents
you mention or that come to mind. Many of these documents will actually be needed as you write your plan
so that you will have solid financial information to use in your projections. For instance, discussion of your
business location might indicate a need for demographic studies, location maps, area studies, leases, etc.
The information in the lease agreement will state the financial terms. Once you have the location, you will
also know the square footage of your facility and be able to project other associated costs, such as utilities
and improvements. (…) You can sort them in a logical sequence, add them to your writing copy, and be
ready to add any new ones that become pertinent during the lifetime of your business” (Pinson,
2005: 114).
In the end, as it is summarized in another guidebook, “a good business plan contains
dreams and ideas backed by facts and figures presented in a standardized format” (Fullen &
Podmoroff, 2006: 37). The exact nature of the “back-up” that is to be provided in the
business plan is however a problem. Depending on the tolerance of the readers of the
document to “extrapolation” from facts, the issue is to know whether the business plan
should just be realistic, or actually real. If all assumptions made in the plan have to be
attested by supporting data, then the plan is no more a plan, but the description of an
existing business. There is indeed a tension towards the immediate actualization of the
plan in the “back-up” norm of business planning, which tends to imply that filling in the
planning forms means fulfilling the planned firm. If, for instance, to be able to justify the
planned amount of a lease, the entrepreneur is asked to include in the plan a copy of the
said lease, then this agreement must exist, and an actual place to let must have been
found. And this performative effect of contemporary business planning norms also works
the other way: the transformation of “dreams” about the future into paper acts as a first
actualization which calls for further actualization. Focused as he is on the role and
difficulties of writing, The One Page Business Plan’s author says it well: “The written word also
produces a contract with yourself that results in immediate action. Haven’t you found that if you make up
a grocery list and leave it at home you almost always remember everything on the list? Many users of the
One Page Business Plan report that as soon as they begin to write their action items – some of which
they have been thinking about for years – they start to take action on them. I think it’s magic!” (p. 21).
This “magic” may however have doomed the business plan. Norms about the
backing-up of the plan indeed became more present in business plan guidebooks after the
“Internet bubble” burst, in early 2000. Fast and risky investment in new ventures,
sometimes based on the sole reading of their business plans, created a general suspicion
against these, as well as a collective move towards more prudence in entrepreneurial
22
finance. In this context, some authors went even further than reinforcing the back-up
norm for business plans. David Gumpert, who had long been an advocate of “proof” in
business plans, as we have shown, issued a new book in 2002 entitled Burn Your Business
Plan! (Gumpert, 2002), in which he proposes “a new approach in which the written business plan
has much less prominence, having been replaced by other means of inspiring confidence in tentative
investors. / In the traditional approach, entrepreneurs seeking to raise money invariably began the process
by contacting prospective investors and then following up with copies of their business plans. Today,
entrepreneurs increasingly begin the process by launching their ventures in some form, and then conducting
formal presentations to explain their vision. (…) As you can see, the business plan hasn’t disappeared
from the landscape, but rather has assumed a much different role in the process of financing and building a
business. Instead of being tackled at the start of the business development process, it is left to later stages,
after more critical tasks have been dealt with and the business is up and running in some form. This new
role for the business plan reflects the fact that professional investors will no longer assume technology and
other significant risk; they demand sales or similar customer confirmation before committing” (p. 5). The
rising paradox of the business plan would therefore be the following: the good plan
would be the one that has already been – at least partially – actualised. Because of this,
and according to another new venture planning guidebook written around the same idea
by a Silicon Valley entrepreneur, one could therefore conclude that The business plan is dead
(Wofford, 2008).
Conclusion
The business plan, as “scientific” as its construction may be, raises more
questions than the scientific methods used to describe the present or past worlds. Like the
construction of facts by scientists, the construction of plans by entrepreneurs stands in a
tension between “reduction” and “amplification” (Latour, 1995). The formalisation of a
business plan, which implies the production of synthetic charts, tables, summaries, and
brief stories, is an extreme reduction of the future venture, which also allows it to
circulate better, be compared to others, and thus possibly enrol new members. But this
double movement is made more tricky, in the case of business plans, because the facts
they constitute are what we called virtualities, or what Gabriel Tarde called, in a beautiful
oxymoron, “future facts” (Tarde, 1901). The possibility for their empirical grounding are
therefore scarce, and this is why the business plan, now long stuck in a tension between
excessive unreality and immediate actualisation, may be said dead. No empirical evidence
however comes to support this claim of a decline in the production of business plans in
the United States or anywhere else around the world. New venture planning, in its
different guises, wasn’t born during the dot-com era, as we have shown, and it seems to
23
be still going strong after that. In spite of all the issues it may raise, the business plan has
indeed proliferated on the market for entrepreneurial finance, as a sufficiently efficient
tool in making supply and demand meet and eventually reach an agreement over the
future. And its success may be attributed precisely to its ability to “colonise the future”
(Giddens, 1991) not only by providing a means to represent this future, but also by
fostering the continuous actualisation of the future during the planning process itself.
The business plan may thus be described as an “accounting plug-in”. Its standard
format is indeed conveyed by various portable vehicles, be they the paper of business
planning guidebooks or the small Excel developments that one can download on the web,
that are added onto each and every entrepreneur, who now always goes around with her
business plan in hand – or at least in her USB key. The portability of the formats is
important, because it allows them to circulate better and be used in the interactions
between entrepreneurs and financiers. The business plan, in its current standards, thus
becomes a powerful coordination tool, and this is reinforced by some of its other
features. This little plug-in indeed takes part in the entrepreneurial process in quite a
specific way. It acts as a small simulation software, that enables the entrepreneur and her
partners to visualize the consequences of the diverse decisions they could make about the
future business. It represents the virtual firm, in a combined narrative, calculative and
graphic way. And these articulated texts, numbers and images happen to be more than
“virtual realities”: the back-up norm that emerged in the eighties and has been strongly
emphasized over the last decades requires that be simultaneously built, out of the plans,
what we may call “real virtualities,” i.e. actually emerging firms.
The virtuality/reality tension that exists between business plans and emerging
firms is an ongoing one, to which authors have, over time, proposed various solutions,
from abandoning business plans to using them as strongly performative tools. The
question that remains, however, is that of the effects of that little plug-in on the
entrepreneurs themselves. One may hypothesize that the availability of such a nicely
portable and possibly performative tool allows new kinds of actors to envisage starting a
business. The device makes certain actions possible that wouldn’t have been considered
so without it. It also possibly fosters certain personal inclinations. Further analysis of
these transactions between humans and non-humans inside the new “cyborg
entrepreneurs” – i.e. men with their plugged-in plans! – that have appeared over the last
decades would be most welcome.
24
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