"The Man, The Mission, The Passion" Husband, Father, Attorney, CPA, Steward Leader, Entrepreneur, MBA, Author, Builder, HBS OPM 25 Class, Mentor, Teacher

Plans are useless, planning is invaluable


Mr. Collier,

Here is a question I’ve been pondering, would you mind answering it? Thank you so much for your time!

Have you ever written a business plan? What are your thoughts on them? Are they needed?

In my life, I tend to over prepare (Finance degree, MBA, CPA, Lawyer, RE Broker, Builder’s License, Harvard OPM Class of 25, YPO, voracious reader) at one level because I tend to be a bit of a gunslinger at another level i.e. I often respond to “targets of opportunity”, moving fast to take advantage of an opening in the market. I tend to be an obsessive thinker, my mind endlessly going down all the branches of various decision trees much like a chess player trying to think as many moves ahead as possible. I am also very risk adverse and I think about the downside, traps and pitfalls of every situation and how I can be prepared to deal with them. Indeed, in my chess playing days, I would always turn the board around in my mind and try to think of how I would attack my position or defend against my planned moves. When I worked as an auditor I would look for the weakness in any system, ask myself how I would commit fraud given the various checks and balances and then go look and see if anyone had had the same idea!

Notwithstanding all the above, I’ve never had a formal, written business plan. Well, once, I did call in that rarity, a good consultant and spend a few days with my senior team looking out into the murky future. It was an interesting exercise, a good bonding experience but I can’t say I ever paid much attention to it.

I don’t know that I would call it a business plan per se but I do have certain principles:

Stay Liquid: Always have a very strong balance sheet and plenty of liquidity.

– Avoid Interest Rate Risk: Lock in long term fixed rate financing.

Never Sell: Unusual in an industry that generally has 5 to 7, we tend to hold our real estate investments in perpetuity. I never like churning the portfolio: not good for your organization, Uncle Sam wants a 25% cut and then you have to find a new investment that makes 25% more just to break even!

Focus on Equity, not Fees.

Keep Control: We currently have partners (mainly institutions) in about 20% of our deals, 80% we are sole owners. I want to stay at or below that partner percentage, meaning we control our destiny to a much greater extent.

– Manage What You Own: We believe our management adds equity value. The only time we’ve managed 3rd party is when someone has knocked on our door and asked to do so; we do not seek it out and we certainly do not do it as a loss leader to get other business as some do.

– Art of the Long View/Grow Prosperous Slowly: I think in terms of decades, quite content to let the other guys eat the marshmallow, chase the quick buck. I’m harvesting rich crops from seeds I planted a long time ago.

– Stay Close to Home: Or at least have a very good reason to go far afield. Distance creates risk (of course, there is a lot to be said for diversification!). I like having roots; in the last half century, I’ve lived within a mile of the same location.

Short answer:

I’m ALWAYS planning and thinking forward but no, I do not write out a formal business plan. This works for me because I’m self-funded (don’t have external investors I have to answer to), I’m horribly over prepared/educated, incredibly driven, and a back of the envelope guy at heart. I do, however, heartily recommend the discipline of a written business plan to most.

Closing Quotes:

“Life is what happens to us while we are making other plans.” – Allen Saunders

“Give me six hours to chop down a tree and I will spend the first four sharpening the axe.” – Abraham Lincoln

“The best laid schemes o’ mice an’ men gang aft agley.” – Robert Burns

As always, I share what I most want/need to learn. – Nathan S. Collier

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