Why My Startup Doesn’t Have a Business Plan, and Why You Don’t Need One Either
By Garrett Moon on August 30, 2011 in News.
I was once involved in a startup business that was to be funded by a parent organization. My job was to plan, execute, and manage a new business, in a new location. For anyone starting a business, this is an excellent opportunity. It was also, an excellent opportunity to learn.
Here’s what I learned.
You see, I had fairly free reign to do whatever I pleased, and I was well funded. Most entrepreneurs don’t start on day one with a fully funded paycheck.
So, I went in with eyes gleaming, and an estimate of my first years expenses and profits in hand. I thought I had it all figured out.
My plan was aggressive. It showed profitability after 18 months. Most businesses shoot for profitability after three years, so I thought that I was doing pretty well.
I guess not.
My employer wanted to see better numbers. They wanted profitability in 12 months time.
Just a Guess
This report wasn’t something that I took lightly. As the companies primary salesperson and manager, I wanted to make sure that I could do what I said I could do. I strongly felt that I could payback all startup costs and fund the business fully in 18 months, but at the end of the day – it was nothing more than a guess.
A mere thought in the proverbial wind.
And really, my employers guess of 12 months wasn’t really any different.
So, I did what anyone would, and I re-guessed my first year earnings. Walla, the deal went through.
By The Book
Just the other day, I caught myself paging through a business book. The title was convincing, but all it really turned out to be was a book about the basics of starting a business. Step by step it outlined what to do first, what to do second, and then what to do last.
One of the first things the book instructed new business entrepreneurs to do was to develop a business plan and earnings estimates. Sigh… more guessing.
Let me break this gently.
Todaymade doesn’t have a business plan.
There, I said it. We didn’t follow the rules.
We also didn’t guess on our earnings report.
Planning For Failure
For me, it just isn’t hard to see the failure in all of this planning. Up until this point in my life, I have yet to meet anyone that actually knows what is going to happen in the future. I know for certain that I don’t, so why guess?
Many people would say that the business plan is there to help guide the company, to keep it on track – so that it doesn’t lose focus. If you ask me, it is more like a safety net to make sure that you do lose focus.
When we do nothing but execute a plan, we lose the ability to innovate and adjust to the changing waters of the business.
A Business Model
One thing that Todaymade does have is a business model. It is important for every business to understand and define their core customers, key resources, and key partners. Once a business understands the nuts and bolts of how money will flow from their customers checkbook to theirs, the rest is a lot easier.
Personally, we have followed the Business Model Generation model for our brainstorming and diagraming techniques. This system is excellent and well suited for the needs of the current economy, but there are others.
Business doesn’t run on plans. When my employer asked me to revise the numbers, he wasn’t asking for anything impossible. It was fairly easy for me to go in and change the projections, but really, what did it do?
Just because I can type it in a Word document, doesn’t mean it will happen.
I really think it is time to get real with ourselves. Businesses don’t run on plans and guesses. Businesses aren’t built on planning and writing everything down. Sure, there needs to be a great understanding of the market and the model of doing business – but where is this guessing getting us?
Businesses are built on hard work and hustle.
I think it is time we start teaching students and your entrepreneurs to start doing, rather than to start writing. Business plan development has become the crutch of entrepreneurs that are afraid to launch.
“But, my plan isn’t quite perfect yet…”
I find it shocking that someone would spend six months writing a document about a business that hasn’t even sold anything yet. A business that skipped the guessing could have already expelled six months worth of energy and gained six months worth of profit.
In this economy, speed matters. We don’t have time to plan and sit around. The days of procrastinating on business plan changes and revisions are over. We live in a world that rewards shipping far more than it rewards planning out every last drop.
And that, my friends, is exactly why Todaymade will never have a business plan.
So, what do you think? Are you a planner, or a fearless entrepreneur living on the edge?