The document outlines 15 reasons why entrepreneurs should prepare a formal business plan, including to clearly explain the business opportunity and provide a roadmap for stakeholders, hold founders accountable, identify resource needs, minimize risks, provide financial controls, and demonstrate that the executive team can articulate a comprehensive plan that details economic viability. Preparing a plan can also help educate and recruit employees, minimize litigation, determine feasibility, and show how the product or service solves problems for customers. The document was written by Hal Spice of Sente Capital Management to advocate for the importance of business plans, especially in difficult economic environments.

1. SENTE CAPITAL MANAGEMENT BUSINESS PLAN
Why Prepare a Business Plan
Some members of business and academic communities question whether an entrepreneur really needs a
formal, detailed business plan, claiming such preparation is a waste of valuable time for a variety of
reasons (the marketplace moves rapidly; no one really reads plans; time is better spent developing a
demo). Below are 15 reasons that counter this popular thinking and advocate why you should prepare a
formal business plan, particularly in this extremely difficult economic environment.
1. To clearly explain to yourself and others why a viable business opportunity exists.
2. To provide a road map (for all stakeholders, internal and external) as to the future
direction of the business.
3. To hold the founders accountable for performance goals and to demonstrate that you
have an experienced and balanced management team capable of executing the business
strategies required for success and implementing the business plan.
4. To provide a schedule, time frame, and detailed metrics for meeting key milestones.
5. To identify resources (capital and personnel) required to achieve objectives and when
such resources will be needed.
6. To minimize possible future business failure by identifying and defining risks that will
affect the execution of the business strategy, the growth of the company and offering
possible solutions to mitigate these risks.
7. To provide internal financial controls and direction.
8. To provide a channel for communication between the executive team and the outside
investors.
9. To provide an analysis of the company’s sustainable competitive advantages and
transformative values1.
10. To provide an analysis that demonstrates an economically viable and sustainable
revenue model.
11. To educate and motivate key employees, and serve as a recruitment tool for new
employees.
12. To minimize the probability of litigation with investors by providing full disclosure
on potential risks and significant challenges faced by the company.
1 "Transformative value" of an invention is the degree to which the invention transforms the lifestyle of a consumer. David Croslin,
Innovate the Future, 2010
SCM Why Prepare A Business Plan Ver 2.5.Docx Page -1- 25-Apr-2011
Copyright 2010-2011 by Hal Spice

2. SENTE CAPITAL MANAGEMENT BUSINESS PLAN
13. To determine the feasibility and viability of the business and to identify the “critical
flaws” in the assumptions underlying the business model, and how these flaws will
be remediated.
14. To identify how and why your product / service solves problems, eases customer
“pain”, or cures market inefficiencies.
15. To demonstrate the executive team has the intellect, skills, and knowledge to clearly
articulate a comprehensive business plan that details a venture’s economic viability
and business model. From the investor viewpoint, if the executive team cannot create
such a business plan, how can they be trusted to create a business that will provide
the requisite ROI that the investor requires?
Next Steps
If you contact me please succinctly state how you feel I can help and I will review your request.
Specifically state your needs to be addressed and important parameters such as time frames.
For Additional Information Contact
Hal Spice 888.898.9381 – US HQ Toll Free
Founder and Managing Partner 650.867.1382 – US Cell Phone
Sente Capital Management LLC halspice - Skype ID
1840 Gateway Drive – Suite 200 hal@sente-capital.com
San Mateo, California 94404 USA www.sente-capital.com
SCM Why Prepare A Business Plan Ver 2.5.Docx Page -2- 25-Apr-2011
Copyright 2010-2011 by Hal Spice