So the question hit me...exactly why am I writing a business plan?
I have spent more than a handful of months trying to lock down on business plans for my different ventures only to discover that for the most point all they did was take up my most valuable asset - TIME! Yes. Time is my most valuable asset. More valuable than anything else I possess.
So I decided I would think through the notion of a business plan here on my blog, listing the quote-on-quote positive reasons for having a business plan, trying to convince myself of why I should have one.
The only actual unquestionable reason for a business plan that I could think of was that investors want to see it. It makes them feel like I know what I'm doing, that I have focus, that I won't waste their money, that I've done my research on the competition, that I know my revenue captures, that I know my corporate structure, yada, yada, yada.
But I don't want investors. I am self-funded. I already know what my market is and there is only one (maybe two) other people involved. We use a collaboration site (basecamp) to record our thinking and conversations, to plan major timelines/milestones, to track todo's, and to house research/intelligence on competition as we come across them. Honestly, having to put all of that into an investor pitch is an overhead that I just don't need at the moment. And I suppose if they really wanted to they could just request access to our site and look around from there. It's all there anyway...in all its 'glory.' Besides, if I'm at an investment posturing position then I really need a prospectus and not a business plan. And if it's an angel investor then it's more about meeting in person than anything else.
It's my money so there is no chance that I am going to blow it on misc expenses. My money is going to pay rent, food, and utilities...and that's it! My car is paid for, I have no mortgage, and a small amount of managed debt so there's no big deal there.
Where research is concerned, how in God's name are you going to know anything about the market until you get out there. I have spent hour upon hour vetting markets only to present it in a plan and have would-be investors/partners gab on about what I don't know and what I should research. Meanwhile, the product isn't getting pushed out there, no revenue is being generated, and I have no demonstrable way to demonstrate (yes I know it's redundant and I'm repeating myself) how in the name of God that the market will in fact respond. At some point you just can't know what the response will be until you try. Might as well get your butt out there and figure it out in three months (while sucking your savings dry in rent) rather than just speculating for the same three months.
Corporate structure? Give me a break. It's me and another guy and we haven't incorporated yet so what's the point.
Ok, ok! I know, I know. Fortune favors the prepared. I'm certainly not advocating that you should abandon reason. But seriously, in today's market, where you have an absolute global competitive realm, the time you spend in the best laid plans of mice (see Hitchhiker's Guide) you could and probably should spend placing your product into the market, if only for one or two people. Then you can review, react, and recreate yourself and your product for the most wild market the world has seen.
So two thoughts on startups...
- Stay Agile. Don't formulate the business plan right out of the gate.
- Put out a rough design including at least two basics:
- Product: What is your product and what problem does it solve?
- Market: Who is your market and why do they want your product?
- Use collaboration, not documentation
- I recommend Basecamp to manage your venture development
- Release Early, Release Often. You biggest obstacle to the market is yourself, not the market. If the market doesn't respond, it isn't your marketing. Um...again...it isn't your marketing, it's your product. It should make sense and the market should want it. Then review, adapt, and improve!
Again, get your product out there. And no time is soon enough.
AND DON'T WORRY ABOUT INVESTORS! (sorry about the capslock...it had to be done) Investors are like laxative, yeah, everything will start moving faster, but you only want to use them when you absolutely have to.