We have all seen the recommendation that you write a business plan to plot out the future of your new startup business.
But before we do lets have a think about this…
In the years leading up to 2008 crash supposedly no smarty-pants economist, government official or banker saw the collapse of the financial system heading our way. Everyone thought Bernard Madoff was a lovely man, ethical and a pillar of the community and RIM never saw Apple iPhone wipe out its market share in a few years.
So what am I getting at?
Its called the unpredictable future and when you write a business plan, say from 0 to 5 years for your business how the hell do you know that the plan is still going to be valid in 5,4,3,2,1 years from now?
The world is certainly not following a plan that we humans are privy to so your nice 150-page business plan documenting every event for your business for the next 5 years is on shaky ground.
We have never written a business plan.
Initially businesses were coming to us asking to use our in-house software that we use for email marketing and social media so we did some calculations in a spreadsheet, did some market research to see if there was a space for us in the market, made sure that there was enough demand, invested a bit for developers to help update the code and went for it. We did not spend 6 months writing out the mother of all business plans.
When you start out in business you will find out very quickly that your business plan is basically worthless. You will find out that the only sure thing is that your business ‘plan’ will change daily. For example a customer will come to you and ask if you can write a module for the software that helps her business. Will you turn that money down because its not in your business plan? Hell! I hope not because your competitor will jump at the chance to write the module and take your client from you.
For me a business ‘plan’ is a guess – a ‘stab in the dark’ so-to-speak. Its a guess that you will still be doing the same thing in 1 year, its a guess that your market will not be saturated in 3 years and wipe out all margins, its a guess that your business partner will not have a stroke and stop working, its a guess your product will not be superseded by something not yet invented and wipe out your entire business sector leaving you with a product no one wants.
I think far too much emphasis has been placed on the importance of business plans for start-ups when instead the focus should be on making sure the fundamentals are there to start – then make a go of it fast – not end up spending 6 months writing a business plan only to find out you missed the boat and someone else started already and took your opportunity from you.