A great business plan can help you look good. But no banker or investor will be fooled if you lack solid assets or good numbers

Who says you need a business plan? As Deep Throat said regarding Watergate, follow the money. The writing of business plans is a small industry unto itself (hey, there's something you could go into!), and there's a myth that you need a good plan before launching a business. Many of the people who will tell you to write a plan are consultants that -- oh my gosh -- make money helping you to write such a plan. The other major advocates are employees of various small-business centers -- people who usually have limited experience in actually running a business or getting a business loan and who need to be busy to justify their salaries.

There are a few times when you need a business plan. When your banker wants one, for example, or when an investor is sizing up your company. But a good plan will help you get a loan about as much as a nice suit will. Like a classic business suit, a good business plan helps you fit in and puts people at ease. It's like camouflage. It will not get you the loan or the investor's money if you otherwise look dumb or lack the assets to guarantee the loan.

Here's my experience with business plans. For many years I didn't have one. When I was growing my company, we couldn't get loans. We were turned down about 12 times, and so we hung on by bootstrapping and racing out to the mailbox to see if any checks had come. Only when my business reached a stage at which it had retained profits did we get a bank loan, and then for only $50,000. But I still had no business plan. One day we realized we needed a bigger loan, tied to our burgeoning accounts receivable. So we approached three banks. I decided to go with Bank A, mostly because I liked the banker. I also liked the banker at Bank B, a Small Business Administration specialist bank. But that banker wanted me to write a business plan, and I was already really liking Banker A. So I called Banker B and said, Gee, I was sorry, but I had made a decision to go with someone else. He said, "You can't do that! Our loan committee voted last night to give you the loan." And I said, "But how could you? You said I had to turn in my business plan first, before you could consider it!" And he said, "Oh, they decided to waive it in your case." (We were "hot" then.) So there I was, a girl with two dates to the bankers' prom. And I really admired Banker B, who has possibly never forgiven me for passing on the loan.

Later, in a desperate moment when I was frantically looking for cash or investors, I did write a lovely plan. It was a well-written, thoughtful plan. It had reasonable scenarios. It had a way for investors to get their money out. Did it work? Nah! Smart investors ignored the plan and grilled me about my lousy balance sheet. And bankers don't make loans unless there's collateral.

As further proof of my theorem, this year we got a "baby loan," or gap financing, of $100,000. We really didn't need the loan at all, but it was part of a courtship dance with a particular bank. You know the saying about how banks don't want to lend you money when you need it but are happy to lend to you when you have plenty of it? It's true. We got this loan without even a whisper about a business plan. And a few months later the bank raised our credit line to $570,000. No plan in sight! Now, if my dear banker had asked, I would have produced a plan to please him. And I'm sure I would have learned something. But I was freed up to sell, which is what I'm really in business to do.

The moral is, when your numbers are good, you don't really need a formal plan. When your numbers are stinko, a business plan doesn't fool anyone. Now, if your banker or potential investor says to jump through a hoop, you jump. The real value of a plan is putting bankers and investors at ease and helping them realize that you're a sensitive, reliable sort of businessperson. So if I don't believe in business plans, does that mean I don't believe in planning? No. It's just that whatever you write in a business plan will have little congruence with reality. Things change too fast. That you can plan on.

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Mary Baechler is CEO of Racing Strollers Inc., a manufacturer in Yakima, Wash.