While strolling through one of the many pavilions at the World Ag Expo one day, I noticed a curious sign at one of the booths. There are rows and rows of these pavilions, lined with the booths sponsored by suppliers of every imaginable product and service available in that industry, but the one that caught my eye had a sign that read, “Business Plans Written”. I must admit that prior to that moment, I had no idea that such a service existed. So, as someone who has written a few, I began to get “curiouser & curiouser“[i]… as Alice proclaimed in Lewis Carroll’s, Alice’s Adventures in Wonderland / Through the Looking-Glass, as I walked by and then went back to listen to their pitch.
The population of the city of Tulare, California, quadruples during the second week of February each year, when the World Ag Expo comes to town. Hundreds of thousands of suppliers and farmers from all over the world gather for the largest event of its kind in the world.
The man-and-wife team explained that people in their industry often had good ideas but needed help starting companies to exploit those ideas. In my never-to-be-humble opinion, anyone unable, by themselves, to conceive of, research the need for, and articulate a plan for developing a company should not be considering starting a business in the first place.
Speak for yourself, John.
Their idea reminded me of the John Alden, Priscilla Mullin, Myles Standish story – expecting someone less interested or less qualified to speak for you is a bit like buying a book for someone else to read, or one drunk asking the other drunk to go to the bathroom for him.
When others occasionally ask me for advice on the subject, instead of doing it for them, I tell them to write a full page about each item in the table at the bottom of this section, and call me when they have finished. After they have developed their own thoughts, we can work together on an endless number of what-if scenarios until they either decide to go for it or discover that their ideas are not worthy of pursuing.
It is necessary, of course, to have a written plan as a snapshot in time so that others can understand it – particularly investors – but I have never seen a business plan get executed the way it is originally conceived. Instead, the real value of the plan is the understanding of the founder(s) as they develop it. It then lives on in their minds, where it can change at a moment’s notice, evolving as conditions around it change.
While a thorough analysis of the first five pages of the table below is essential, in my experience, the importance of pages (6 & 7) is the area most undervalued by aspiring entrepreneurs. There is little question that inventing a better widget, satisfying customers, and beating out the competition are all critical to success, but the financial analysis is where we must stop to understand that the sole purpose of starting a company is to make a profit. A business with no profit is more correctly known as a hobby.
Gerry Ford, who owns over a thousand coffee shops around the world, mostly in Europe and Asia, once told me that he needed a replacement for the manager of one such shop that he had recently purchased in Los Gatos.
He explained that, even though he had regional managers to oversee multiple shops in designated areas, each shop operated as a separate business, with local managers responsible for their own “profit center”.
The manager in Los Gatos did a great job of bringing in lots of customers and handling the day-to-day business of serving them, but she had no training or experience operating a business, and seemingly was unable to grasp the importance of producing a P&L report to use in managing the financial workings of the business…
The Idea – product or service to be offered
The Market – TAM (total available) and SAM (that to be served)
The Competition – existing and that to be stimulated by the “NewCo”
The Team – all those who will help execute the plan
The Exit Strategy – IPO, cash cow, acquisition, etc.
5-Year Income Statement -[ii]including Cash Flow summary full page, “A” size, typewritten, footnoted
5-Year Balance Sheet – CapEx[iii]Long-term physical assets (buildings, equipment, land) , Working Cash, & Cap-Table[iv]A detailed spreadsheet showing a company’s equity ownership (founders, investors, employees), type (common stock, preferred stock, options, warrants), and percentages over time.
Further to that understanding, CEOs who have never produced a P&L report by themselves will always lack the critical understanding of “the numbers” needed for success. An in-depth knowledge of every line in the Income Statement (P&L) is absolutely essential, and that knowledge cannot be had without a basic understanding of accounting principles. Ironically, that skill is not even difficult to learn.[v]One of dozens, if not hundreds, of online courses, some of which are even free..
The most common problem occurs when management hires a bookkeeper to “produce the numbers”, not appreciating that bookkeepers don’t produce numbers. Management produces the numbers, and bookkeepers collect them to put into spreadsheets[vi]That’s why they are referred to as bean-counters. so the management can understand them easily.
The successful CEO tells the CFO what numbers he or she wants to see, and when they want to see them, not the other way around.
By: Jim Written: circa 1990 Published: October 2025 Revised: December 2025
A detailed spreadsheet showing a company’s equity ownership (founders, investors, employees), type (common stock, preferred stock, options, warrants), and percentages over time.
