Recently in class, an entrepreneur who had started three businesses mentioned to a state of Wisconsin auditor—who happened to be taking the class—that he had never done a business plan, even though many people had told him to.
Later in class, while sharing a story about a friend going into business, he described the following conversation he had with her. These were the questions he asked:
- How much does it cost you to make it?
- How much can you sell it for, and how will you price it?
- What are your costs like rent, utilities, and overhead?
- How many units do you need to sell to break even and make a profit?
As he described this conversation, he had completed what I called the entrepreneur’s business plan. He was quickly looking at: What do I sell this for? What is my gross profit? What is my overhead? Can I make a profit? And how many can I sell?
At the startup stage, the question of how many you can sell can be a bit of a guess. I remember my father saying he had to run three sets of projections when he started. Referrals were key to his sales and marketing plan and profitability based on his business model. How many referrals did he think he could get? He didn’t really know, but it gave him a frame of reference for what success looked like in the numbers and what he needed to do to make it successful.
He learned the specifics required to hit certain goals for sales, profitability, and cash flow. Even though the stress of a business can make you think, “What did I get myself into?” running these “what if”scenarios helps you anticipate the road ahead. Then it becomes a matter of whether you have the market, relationships, connections, or distribution to sell enough to break even and make a profit.
A spreadsheet and a manager’s business plan would include a budget and three sets of projections (conservative, business as usual, and optimistic), among other details. A strong budget considers the four main questions above, along with other cash flow needs and outlays like equipment or loan repayments.
The manager’s business plan takes into account the extra details to ensure nothing is missed and answers the question Keith Cunningham, who Rich Dad from Rich Dad poor dad is based on taught: “What don’t I see?”
If you are seeking outside funding, bank financing, or an investor, the manager (accountant, banker) or investor will want to see that you have considered everything. They aim to minimize risk. There is already enough risk in any business, so they look to eliminate unnecessary risk and plan for what-if scenarios through the numbers.
The entrepreneur, on the other hand, has an appetite for risk. That is why they are an entrepreneur, not a manager.
After the business owner in our class shared his conversation, I pointed out that he had done a business plan. He had run the quick calculations in his head to understand the key performance indicators needed for profitability. If those worked, the rest should take care of itself—if managed correctly.
That phrase is key: if managed correctly. Otherwise, “what if” turns into what was, what could be or is or is simply theory on a spreadsheet not “what is.”
Once a business starts, it needs both sales and management. The manager’s business plan helps move a business from chaos to control—from what is in your head and heart (emotional drive) to what is clearly laid out on paper. It reduces irrational exuberance, over optimism, and the emotions we can have attached to our vision. Which is a very good thing because it grounds us and ultimately because when emotion is high, intelligence is low!
The manager’s plan brings critical thinking, problem-solving, and the ability to anticipate challenges and capitalize on opportunities. It helps determine not just how much you can make, but how much you can keep—in profit, cash flow, and owner take-home income. It also supports setting long-term personal income and savings goals. In many ways, a manager’s business plan is about effective goal setting. Taking your vision and making it concrete, with measurable goals and milestones.
The business owner in our class had done a business plan—and this is how many entrepreneurs approach it. They are comfortable with risk, run quick calculations (calculated risk), believe they can figure it out, make a decision, and move forward.
That is what allows entrepreneurs to get started, and make decisions and take actions quickly!
However, strong management is required to sustain and build a profitable organization. Without the entrepreneur’s business plan, a business is never started or innovated. Without the manager’s business plan, it is unlikely the business gets past infancy. A lack of accounting, cash flow management, and systems are common challenges at that stage and must be addressed for long-term, sustainable growth.
Not knowing your numbers limits growth and long-term potential. Knowing your numbers allows you to move from infancy to adolescence, from chaos to control—or better yet, to direction to intentional growth. Knowing your numbers empowers you to make sure you are making money and know how to make more of it!
This also highlights the importance of the entrepreneur’s vision—what exists in their head and heart—and the need to bring clarity to it. The manager’s plan helps support that process.
Jeff Bezos once shared that when he, Warren Buffett, and the CEO of JPMorgan Chase explored reducing healthcare costs, they had a goal—but not yet a vision. They didn’t yet know how it would work or how to deliver it, but they agreed on the outcome.
We should also remember what Richard Branson said: if he had listened to his accountants about starting Virgin Airlines, they would have told him it would never work. Steve Jobs also spoke about the importance of being unreasonable—because unreasonable people achieve what reasonable people think is impossible.
Understanding the simplified variables—like our business owner did—allows entrepreneurs to make quick decisions. At the same time, working through the details helps double-check thinking, uncover blind spots, and minimize unnecessary risk.
Remember: complexity is the enemy of execution.
I recall a famous Las Vegas casino owner, Steve Wynn being asked how he takes such enormous risks. He explained that by the time they complete all the analysis and preparation, he is confident it will work—and at that point, it doesn’t feel like a risk.
This is a great example of both the entrepreneur’s and the manager’s business plan. His answer reflects both perspectives.
Both are valuable. Knowing when to focus on the big picture and when to dive into the details—“the devil is in the details”—is one of the most important paradoxes, or shall we say complementary skills in business. These are tools for decision-making. And ultimately, decision-making is what matters most.
Without the entrepreneur, a business is unlikely to start, innovate, or move forward. Without the manager, the entrepreneur ends up with chaos and a disorganized business. These skill sets are very different—almost opposite—but both are essential.
For the best results, they must work together—either within one person or through collaboration with others.
Whether you are an entrepreneur or a manager, what can you learn from the other? What questions can you ask to better understand each other’s needs, vision, and goals?
When these two perspectives come together, they create a powerful force. Instead of being stuck in conflict—growth versus control (which are often inversely related)—you can find where solutions overlap. You uncover the unknowns each side sees and use them to support growth, profitability, cash flow, and long-term success.
Ask questions. Listen patiently. Process the information. Ask another question. Listen again. Come with the intent to learn, not just to respond.
Over time, what may seem like opposing forces can produce results neither could achieve alone.
A mature entrepreneur and a mature manager both learn to integrate these perspectives.
