This article discusses why startup business plans should be short and action oriented. It is mostly intended for new entrepreneurs wondering ‘what makes a good business plan?’
There’s no such thing as a perfect business plan, but that’s ok. You’re not going to win or lose on the back of it. All you really need is to describe your situation and what you plan to do. The intention is to organise your thoughts, and make sure you’re clear about what you want. Many academics and business analysts will have you believe that your plan should be 100+ pages long, define multiple scenarios, provide detailed resource allocations, and include hundreds of statistics or fancy charts from authoritative sources. This is a colossal waste of time for most if not all small startups. If you don’t have teams to coordinate and millions to spend, you’ll be better served by a lean simple plan.
It’s business fantasy
By its’ very nature a startup business plan is attempting to predict the future; and we all know the future is unpredictable. So whilst it feels reassuring to write an enormous plan, the first two things you should consider are:
* No matter how hard you work on it or how much time you spend, your plan is fictitious. It’s just the story you’ll tell yourself and others.
* It can never include all possible outcomes or details.
* It is neither right nor wrong. Don’t get fixated by striving to make your plan ‘right’. Likewise, don’t worry about things not going as predicted. Remember it’s just a story, it’s too early to know if it will work as planned.
Don’t confuse yourself with big business
Your reason for writing a plan is very different from someone employed in a larger company (or government), so they’re not going to look the same.
* They need to justify the proposed expenditure;
* You just need to organise your thoughts and finances.
You don’t have stakeholders you need to dazzle with the sheer quantity of inane detail in your plan. It’s just you and your computer (and maybe a friend or partner, but they’ll be just as crazy as you).
You’re going to write the plan, largely to satisfy your own point of view. It’s not going to be open to a lot of criticism (like a corporate of government plan). It’s very difficult to argue about the future- my view is just as valid as yours, even if we’re opposing. Sure, some outcomes are more probable, but isn’t a guarantee. So if a friend tells you that your business plan, your prediction, is wrong… how likely are you to listen?
It’s also unlikely you’ll finish writing it and say “Hrmm… not a good idea!” and toss it out. You’re not writing to test a theory, you’re doing it to organise your thoughts. Before you started writing, you’ve already decided that this business is something you want to do. Let’s be honest, if something in the plan doesn’t add up, you’re more likely to tweak the numbers than decide the idea is not viable.
Working on your plan is not working on your business… even if it makes you feel good
On my first ‘real’ startup business plan, I bought several books and scoured the web for advice. I believed that if I did the hard work, and got the plan right, that my business would be a success. I spent months on that plan. I was certain that it was the key to success. I developed business several models, mapped multiple scenarios. I even wrote a 26 page SWOT analysis that included all of my major competitors. It ended up being 50K words, on 130 pages. I was a one man writing machine. I felt empowered, and in control. I’d nailed all of those uncertainties that we face when starting a new business! (I was suitably disconnected from reality :D)
Then, I launched my business. I put the plan in a draw and didn’t look at it for 12 months. Why? Because like any good fantasy novel, once I’d read it I knew the ending. With all the mystery and excitement gone, I was waaaay too busy to indulge in it again. Besides, the plan was out of date by the time we launched! And yours will be too. Just wait until you speak with your first real customer, or face your first big challenge. Your business plan will look pretty flimsy to you then
I’m not bashing startup business plans…
I think business plans are essential. However my point is to bring your attention to the cold reality of most plans. They’re exciting fiction for a select audience. Your energy is better spent on your business, working towards that first $1 profit. Don’t get sucked into the myth that your plan needs to be big enough to crush a Leprechaun.
So what should be in a good plan?
You business plan is a snapshot of 4 things. These are:
* Your proposed business
* Your proposed customers
* Your financial position
* Your competition (OPTIONAL)
If your plan describes each of those 4 things in detail, you should have a clear understanding of what you need to do, who you need to do it for, and how much you have to risk to get it going. If you’re happy with the way it all looks, if it all seems reasonably logical to you, then you give yourself the thumbs up. You’re ready to go! … And start work on your project plan
Note: I’ve listed competition analysis as optional because in my experience most entrepreneurs don’t take the competition very seriously (myself included :)). So SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis or similar is often a waste of time. Analysis is tends to be too fluffy, and an open invite to wonder off into fantasy land, with unfounded statements such as we will do x better… because we just will. Fun to write, but not really useful.
Yep. Your business plan isn’t the start and finish of your planning activity. It’s just the big picture. Now that it’s done, you can get to work on the actionable things you need to do to bring home that first $1 of profit.
In a nutshell, you project plan should help you organise the tasks or activities you need to undertake to create your business. You’re going to list everything you need to do, and determine the correct sequence of events. This will help keep you focused, and make sure that you spend your money and time on the right things. This is something I will cover in future.
Coming soon, I will have a ‘how to’ that will get your business plan done in less than an hour, and also some project planning basics to help get things organised!