One of the best ways to succeed in life is to learn from the successes and mistakes that other people have made. This is true when it comes to creating business plans also. Even though over the years how we present business plans - from using parchment paper to PowerPoint presentations - the end result is still to have a written plan that demonstrates to the business owner and possible investors how to make a profit.
Let's take a brief trip through the historical timeline of business plans.
The 18th century
The first business plans were probably written thousand of years ago upon the advent of the first trading activities. Maybe they were written on clay tablets by the ancient Sumerians, when they were writing about trading and livestock. But credit for the modern day business plan is often given to Pierre Samuel, Sieur du Pont de Nemours.
Briefly: Before Samuel and his son left their native France in 1799 to build a gunpowder mill in Delaware, they wrote numerous letters to potential investors that offered a plan on how the mill would make money. It worked. Samuel and his son secured their investors, and today their business is known as the DuPont Company.
The 19th century
In the 1800's, associations began holding business plan competitions. Today we would probably call it crowdsourcing. Industry leaders offered cash prizes to encourage the best and most talented to submit their ideas for improving production or fixing vexing problems.
For example, in 1874, the National Butter and Egg Convention awarded $1,000 to the best essay that discussed how to produce the largest quality of butter, of best quality, for the cheapest price and how to sell it at the highest price. They were looking for a business plan. In fact, they even referred to one in a lengthy statement: "the best incentive to the adoption of any business plan is to show that it pays. Let it be provided and illustrated in practice that improvements in butter making secure larger profits, and they will be adopted."
The most famous of these business plan competitions was in the 20th century: the Orteig Prize. $25,000 was offered in May 1919 by a New York hotel owner to the first aviator to fly from New York City to Paris or vice versa. Charles Lindbergh won the prize.
Today, universities, communities, corporations and others sponsor business plan competitions, as a way to encourage entrepreneurship and industry best practices.
The 20th century
By the 1900s, it was common wisdom that a business plan was crucial to the success of a business. For example, a 1921 issue of The Journal of the Engineers Club of Philadelphia, pointed out the importance of a business plan, especially if you wanted the business to succeed:
'It is necessary not only to have big men in the operation of a big business, but it is above all necessary to have a good business plan. Individuals come and go, they work and they pass, but the work must go on.'
Over 50 years later, in 1976, Changing Times (a magazine that later became Kiplinger's Personal Finance) offered advice to the aspiring entrepreneur, which sounds like it could have been written today:
'An early step in starting a business is to draft a blueprint that shows how your business will be organized, where it is headed and what you'll need to get there. Bankers, suppliers and others you'll rely on for help will want to see your plan. It needn't be a formal document, but it should contain information that demonstrates you know what you're doing.'
The 21st century
Business plans are still as important as ever, although how you write and read them may be different than in the past. Today, there are apps, templates and software designed to help people create their business plan. You can even take workshops, seminars and audit college classes on the subject. Even the TV show 'Shark Tank', is essentially about the importance of having a good business plan. While business plans may be flashier than ever, they're very likely to be around in the 22nd century.
Learning Lessons from History
- Throughout history, one thing is the same. You need to show investors how to make a profit.
- The centuries and decades may change, but the results remain the same: Business plans don't only benefit the investor, but the business owner. They force business owners to think critically about their business.
- Entering business plan competitions can be good motivation for getting your plan finished and executing it well. The Public Relations for the winners is outstanding.
Applying History's Lessons
- First, examine your business plan and ask yourself if, based on the plan, you could envision your business being around 100 years.
- Second, examine your business plan more critically by asking yourself whether you think future generations might look back on it and if they would admire it. If the answer is no, then the current generation may not either, and you have some refining to do.