Talk to someone who runs a successful business and ask them, “When was the last time you looked at your business plan?” Chances are they don’t even know where to find it.
“Three Start-Ups, a Year Later” [NY Times] gives some examples of how little the original plan for a business matters once you’re actually doing something.
Tina Ericson recently shut down her online T-shirt store, Mamaisms Gear, in Wilmington, N.C., overwhelmed by the strains it was putting on her corporate job. “It seems like it was only yesterday that we were discussing our plans to make $100,000 in revenue the first year,” Ms. Ericson said. “We made some very expensive mistakes.”…
She predicted sales in 2008 of $100,000 at Mamaisms Gear, which intended to offer a broad line of T-shirts and other products with “Mama Says” slogans like “Quit Whining.” She also talked about creating a Web site for women and starting a consulting company for the financial services industry…
But by June, with economic growth slowing, all three business owners were scaling back their ambitions. Ms. Ericson had abandoned her plans to create an Internet community for women and to start a consulting firm to concentrate on marketing her T-shirts to boutiques.
The other two business profiled are still alive but have also completely rethought their original plans. They’ve changed focus, services, salaries, partnership arrangements, etc.
Sure, you can blame the economy. But this type of thing is par for the course even when things are going fine. Businesses, like armies, always have to adjust to the facts on the ground. If these companies’ one year projections were so far off, imagine how worthless those year three (or five) projections turned out to be.
It begs the question: What’s the point of a business plan if it’s obviously a fantasy that has nothing to do with reality? If these projections are just numbers pulled out of thin air, why pay any attention to them? Wishful thinking doesn’t really benefit you in any way.
It seems like most people write business plans just because they think they’re supposed to. They’ve been told a business plan is what a “real” business needs so they go ahead and start making shit up. Then reality happens and the whole thing goes out the window.
Sure, thinking about the future can help. But writing it down and thinking it’s any sort of plan is foolish. The truth is you’re not going to know what to do until you’re actually doing it.
Scott Ganyo
on 11 Dec 08That may be true unless you want money. Investors and banks are going to want to see that plan of yours.
Scott
Paul Leader
on 11 Dec 08Also, it’s a good example of why you should keep things simple and concentrate on one, concrete and achievable idea, rather than having lots of grand schemes.
Sounds like Ms. Ericson was more interested in creating communities and such like, rather than selling a product at a profit that could sustain the business. A lesson for us all, you can think about all the good stuff once you are making a profit.
Paul
Jay Meany
on 11 Dec 08Yes, that original plan may in fact “go out the window” but only in the sense that the “plan” needs to be fluid. Also I think this is a personality type issue.
For me, pre-visioning and forward thinking is indispensable to growth and direction. I have found the best way to foster action is to write ones vision down. It is as well folly to be married to anything and become rigid to the point of destruction in the face of reality. That is the fastest way to go out of business.
Even if I scribble it on a napkin I can then forget it and and forge ahead. I have often found notes and journal entries years later, long forgotten, describing what has taken place in advance. Powerful stuff.
Ivan
on 11 Dec 08There is an excruciating amount of time used to write scripts for the movies. When the finished movie and the original script are compared they most often turn out like two totally different projects.
Why do we keep on writing scripts and making business plans? It’s a total mystery and remain so it shall. Better not talk about it. (Basil: “Don’t mention the war.”)
Daniel Tenner
on 11 Dec 08“Sure, thinking about the future can help. But writing it down and thinking it’s any sort of plan is foolish. The truth is you’re not going to know what to do until you’re actually doing it.”
I think that’s a very short-sighted and foolish comment to make.
A business plan can have many uses, but here you’re thinking about the internal uses (rather than for raising investment or other external validations). For internal purposes, a business plan achieves several objectives:
1) It sets out a clear, common vision for the business. You can have endless conversations in the coffee shop or over a beer, but once you see them in writing, things take on a clearer reality. So the first internal purpose of a business plan is to ensure that all the founders are on the same page and clear about it.
2) It ensures you’ve given at least some token thought to all the key elements of a business. If you’re smart, before writing your business plan, you’ve had a look at a few templates and noticed what is supposed to be in there. Based on that, you’ll spend time thinking about things such as logistics (if relevant), cash flow, marketing, sales, market research, competitor analysis… All those are things that should be at least considered before you commit the next 3 years of your life to chasing an idea.
3) As part of this, a business plan helps you to validate, more explicitly, by putting some numbers into it (those should be very conservative numbers for sales and very exaggerated numbers for costs) that all these different aspects of the business are viable. It’s worth doing that tiny little bit of work to ensure that it is even possible theoretically for your business to turn a profit.
4) If you have more than 2 founders (and even if you only have 2), a thorough business plan can also be a management tool, by making it clearer what the essential parts of the business are and thus making it easier to coordinate those tasks between all the cofounders.
It’s funny, I wouldn’t be surprised to hear the typical SV start-up moaning about business plans, but you guys, of the “getting real” school, should understand better than many other people that making sure the business is cohesive and has the potential to be profitable. A business plan can do just that, and all that for only a handful of weeks of work on the side… seems cheap.
Daniel
Michael
on 11 Dec 08Banks want to see a business plan. Sometimes plans are required by regulators for compliance. Plans weed out a lot of people who shouldn’t be in business when they start to think through it. Some businesses must be executed precisely and a plan is helpful. Some business plans are written really well, 37 signals style, and are entirely a good thing. Business plans written to grow a business are helpful in a larger organization.
Tim Berry
on 11 Dec 08I think you’re onto something very important here but missing the real win.
The point ought not to be that plans are useless because things change; or that plans are useless because people ignore them; but rather that a plan is only the beginning of the planning process.
What’s supposed to happen is not just a plan, but a plan as the first step of the process, to be followed by plan review, corrections, noting changed assumptions, and, ultimately, management.
And if you don’t have the plan, what can you track? How can you note changes in assumptions, and the implications to management for present and future? Without a plan it’s just all haphazard.
Failing to follow up and manage a plan, failing to keep it alive, is sort of like falling asleep at the wheel of a car. You don’t say the steering mechanism was faulty if the driver failed to use it.
And the logic of saying that planning isn’t beneficial because people doing it wrong is sort of like saying diet and execise is unhealthy because most of us fail to follow through.
You’re on to something here; I’m just saying …
Daniel Tenner
on 11 Dec 08I’ll just add also that planning – which is the only purpose you’re considering – is actually, imho, the least important use of a business plan. Just because it has the word “plan” in the name doesn’t mean it needs to be a glorified gantt chart.
Terence Pua
on 11 Dec 08I think writing a bplan is useful for the purposes of just getting your thoughts on paper. When you do that, you think through things and that act is the actual “worth” of writing a bplan.
Beyond that, 1, 3, 5 year projections are useless.
Yoav
on 11 Dec 08The one thing you know about a business plan is that it’s never really going to happen that way. Reality is always going to be substantially different from your projections. But the best companies write solid business plans and strategies and update them constantly, because in writing a business plan you have to do the following things:
1. Think about your capabilities, resources and networks as a company
2. Look at and analyze the market and your customers
Any company that routinely does these two things is both self-aware and up to date with the market, which are two important traits for success.
Hashim Warren
on 11 Dec 08So, what’s the alternative?
ML
on 11 Dec 08That may be true unless you want money. Investors and banks are going to want to see that plan of yours.
Hmm, then maybe it should be called a “loan application” instead of a “business plan”?
David Andersen
on 11 Dec 08“Sure, thinking about the future can help. But writing it down and thinking it’s any sort of plan is foolish. The truth is you’re not going to know what to do until you’re actually doing it.”
A terrible conclusion after an otherwise decent bit.
A plan is useful for forcing yourself to think about what you want to do, how you’re going to attempt to do it, and whether or not it’s all realistic. The key here is thinking – honest, real, hard thinking. Sure, many things will change in the course of execution, but a plan is still valuable to start and to compare with reality down the road.
Philip Arthur Moore
on 11 Dec 08“Plans” – Dreams – To-Do’s – Goals, at least it would seem that way to me, given that plans rarely go 100% to fruition. But I do think that they are necessary for some people. Aside from the “loan application” that ML speaks of, a plan is also a way to firm up thought about moving forward, and for teams, having a long term agenda or modus operandi is at times more useful than a bunch of To-Do’s that on a standalone basis do not center a team on a larger end game.
But in my day-to-day, planning is a great waste of time.
Paul Boehm
on 11 Dec 08While you sometimes need BPs (e.g. to show to investors), the worst part about them is their short time-to-live in the early stages. Your idea of the business, the market, and how to pitch your product, might get better week by week, and your plan needs to be updated to reflect these changes week after week.
I’m tempted to call this overhead the BP a tax. If you’re at all qualified to tackle your market of choice, your mental strategy model already has to be much more current and thorough than any written business plan could ever be.
Sanity-check the numbers in a spreadsheet once in a while? Sure. Update your BP, Executive Summary, Spreadsheet, Coversheet, Presentation, Roadmap, ... every week? No way – you’d be insane to do that.
That is, unless you’re not doing it because of the business but just to show to others while raising cash.
Finding the right balance between doing stuff that actually improves your product/market presence and all the other stuff like raising cash, is one of the toughest calls in early startups.
My experience is that time spent on improving your product and traction have a significantly better getting-funded-payoff, than refining your businessplan. Unless they really like what you’re doing, noone’s gonna read it anyway.
Mike
on 11 Dec 08“In battle, I have always found that plans are useless, but planning is indispensable.” Dwight D. Eisenhower
Tony Wright
on 11 Dec 08@scott ” That may be true unless you want money. Investors and banks are going to want to see that plan of yours.”
FWIW, we talked to dozens of early stage VCs and angels (and ultimately closed a very small Series A round). Not a single one ever asked for a business plan. One angel group asked for 5 years of financials (we immedietely stopped talking to them—what a stupid freakin’ thing to ask an early stage business!).
Close your em tags, y'all
on 11 Dec 08Testing
Grover Saunders
on 11 Dec 08Hmm, then maybe it should be called a “loan application” instead of a “business plan”?
You understand why banks/investors require business plans right? They don’t actually vet out the plan itself. What the hell does the guy processing your loan at the bank know about running an online T-shirt business (or whatever)? They want a plan because it proves that you’ve actually thought about everything that will be involved. As pointed on out this very blog, the distance between a great idea and a great idea actually implemented is enormous. If I decide to open a restaurant, and all I’ve thought about is the menu and decor, then my restaurant will fail, and soon, having wasted an enormous amount of money.
It’s just like writing a paper in college. They don’t care about the conclusion, they just want to see that you’ve really thought about the subject and can make rational decisions. Yes, you shouldn’t let the business plan run your business (and I think most would think of that as part of the plan itself), but to use that as an excuse not to plan at all is just lazy and a fine way to fail.
Sean Murphy
on 11 Dec 08Recoiling from “analysis paralysis” you have come down on the side of “extinction by instinct.” I think even even scrappy bootstrapping firms benefit from some planning (and retrospective analysis).
“Plans are worthless. Planning is essential.” Eisenhower
“Planning is a means. If it becomes an end, then there is a problem. Without planning, everything encountered is completely new.” Will Kamlishian (from a comment in http://stakeventures.com/articles/2005/06/06/bap-3-the-evils-of-business-plan )
See also http://www.skmurphy.com/blog/2007/11/25/planning-in-a-bootstrapped-startup-a-model-from-will-kamishlian/
NIvi
on 11 Dec 08I agree that 99% of plans and business plans are waste. If we stopped to ask “Why are we planning?” we would probably come up with better plans.
For business plans, I think Steve Blank’s approach may work. Start reading at slide 70 of his Customer Development Methodology. In a nutshell, you lay out your hypotheses, you test them with the customer, and the lessons learned from the tests become your business plan.
I also like to put together business plans in brief decks. The key here is to timebox the first draft (half a day?) and then start testing the plan.
GeeIWonder
on 11 Dec 08Talk to someone who runs a successful business and ask them, “When was the last time you looked at your business plan?” Chances are they don’t even know where to find it.
Disagree. If they put the time together, be it ‘loan application’ or not, then they know where to find.
Or else they fell ass backwards into success.
Idiocy and inefficiency do not come to mind as hallmarks of successful people, to me at least…
Rafael
on 11 Dec 08Doesn’t it smells like Big Design Up Front applied to business?
The problem is almost the same: if you want to play in this waterfall-like fashion you’ll need to accept it’s weight, and I do believe that the way business plans are taught in schools, manuals and how-to-get-rich guides is just a modified version of a big requirement specification.
Thinking and acting in agile ways doesn’t seems to go very well with this approach.
Cheers
Max
on 11 Dec 08I have started a few different businesses, and have found that detailed business plans are no good.
2) It ensures you’ve given at least some token thought to all the key elements of a business. If you’re smart, before writing your business plan, you’ve had a look at a few templates and noticed what is supposed to be in there. Based on that, you’ll spend time thinking about things such as logistics (if relevant), cash flow, marketing, sales, market research, competitor analysis… All those are things that should be at least considered before you commit the next 3 years of your life to chasing an idea.
This sounds like it should be the case. But from experience, that can lead you down a single path to the destination, even if it isn’t the best way to get there.
You should have an overall goal/mission (i.e. “to make the best quality premium t-shirts”) and some basic knowledge of how much money it might take to get there. Other than that, it’s best to figure it out along the way. There are so many variables with marketing, logistics, etc. that you don’t want to tie yourself down with a plan that’s going to change on an ongoing basis.
The military has learned this well, giving troops overall objectives (“capture so and so’s base”) but letting them figure out the best way to do it. They realized that telling them how to accomplish the mission, or not allowing them to adjust it in real-time, leads to disaster.
Robert Einspruch
on 11 Dec 08Not only do business plans reflect fantasy, not reality at minute 1 of day 1, but here’s tip (mentioned above): no one, and I mean NO ONE, is going to read it but you. Remember, a business plan is fiction, and very few investors have time to read anything longer than one paragraph of non-fiction! We spent way too long writing a business plan instead of starting the business and adjusting on the fly, so we are guilty as charged! :-)
Max
on 11 Dec 08Also, for proof that business plans are completely unnecessary to start a business, refer to the book “Losing My Virginity” by Richard Branson.
MC
on 11 Dec 08Chances are they don’t even know where to find it.
What? They don’t put their Business Plan under version control?
Grammar Girls says ..
on 11 Dec 08.. you are using “begs the question” incorrectly:
http://grammar.quickanddirtytips.com/begs-the-question.aspx
“Begs the question is actually a term that comes from logic, and it’s used to indicate that someone has made a conclusion based on a premise that lacks support”
I’m raising this pet peeve only because I’ve seen it a couple of times here lately and because 37S emphasises good copy writing and advised to hire good writers in the past.
NewWorldOrder
on 11 Dec 08Matt, love the post.
The approach proposed by by Steve Blank (via Nlvi’s comment) is pretty much the “Innovator’s Solution” approach…Prioritize your assumptions. Test them in order of importance. Keep testing until you find something that works. Once you find an approach that’s working, crystallize it (maybe in the form of a b-plan) and make it an official part of your business process.
A concept statement is probably the most, most business would need to get started.
Jacob Patton
on 11 Dec 08I agree with Rafael: Big business plans are akin to lengthy spec documents.
I’ve worked for organizations that wouldn’t start on a project without lengthy planning meetings, oodles of emails, and several Word documents outlining the project “purpose” and “strategy” (each revision with changes tracked, of course). Since starting my own company, I’ve eschewed these docs (there’s nobody to read them!), and I find that it’s quicker to jump right into projects and figure things out as I go along.
Do I still think about the profitability, strategy, and goals of the business? Of course. But now that those thoughts take place during the development of my products, I’m able to work more quickly and more fluidly, and my daily work notes, doodles, and daydreams are much more valuable to me than the ill-fated spec docs or project plans have ever been.
Tim Berry
on 11 Dec 08Another frequent misunderstanding - comes up several times in these comments - is the idea that you don’t want to plan if investors or banks don’t demand seeing your plan, or, for that matter, don’t read your plan.
What, knowing what you intend to do, and why, and on what dates, and how much, and who’s responsible for what is not a good idea if nobody outside your company is going to read it?
That again is because of confusing having a plan with having a full formal plan document. Those are separate things. All businesses should have a plan, always, but keep it alive and use it - plan vs. actual, plan review, tracking progress - to manage the company. Keep it on the computer if you don’t need to print and produce and submit it somewhere; but use it.
And the idea that having a pitch presentation or slide deck is instead of having a plan, well, isn’t it a good idea to know what you’re saying - as in what you plan to do - before you do the slides. Maybe what you think you can sell, to whom, how much money you need, etc? Since when is the pitch instead of the plan? It’s supposed to summarize the plan.
Tim Jahn
on 11 Dec 08As the old saying goes, you never know until you try. Papers and theories and ideas are one thing…but execution of those papers, theories, and ideas are something else. Well said!
Arpan Jhaveri
on 11 Dec 08I think it’s important to separate the “idea discovery” phase from the “execution” phase. First, if you don’t have an idea, or if you only have a general idea of what you want to do, a business plan is nearly worthless. The best thing is quite literally, in my opinion, to experiment with that idea. See if you can get some traction with it in the marketplace and make sure you start small. Once you have traction, planning is incredibly important.
Any business will need to know how to scale its operations, who its competition is, what threats exist to displacing it, and how much capital it will need to scale. Maybe the new model should be (a) experiment you way to success, (b) put together a business & operating plan to provide some general direction of how to proceed forward. Mistakes this early in the game, i.e. not having thought through things, can kill the company.
Dean
on 11 Dec 08The case for planning particularly for small businesses generally comes down to two factors: (1) there is no time and (2) there is too much useless paperwork involved. So out with the plan, and along with it the planning. Useful planning creates a web of thoughts crucial to navigating today’s dynamic business environment for at least two key reasons -
1) Planning makes us more receptive to signals from the outside world. We generally cannot perceive signals from the outside world unless it is relevant to an option we have already worked out in our imagination. In other words, it is not that “I will believe it when I see it” it is rather that “I will see it when I believe it”.
2) Planning by its very nature helps achieve focus. And what we focus on becomes our reality.
Everyone has a plan of some sort bubbling around it their head. It is human nature … along the lines of I’m going to have Chinese tonight, here is my shopping list for the grocer, and so forth. Someone once told me that he has generally seen more planning and organizing going on at the kids’ soccer and football games than in business. So I’d say that there is a lot of planning that goes on that is not acknowledged, particularly in business.
And no plan survives its first contact with the real world. That is why Tim Berry is suggesting that a plan is a living things vs something static.
I suspect that the reason some successful business people say they don’t go back to their plans is that they have those plans firmly in their minds and while there is no paper in evidence, there is definitely a plan and it is constantly being worked.
Matt
on 11 Dec 08@ NWO… “A concept statement is probably the most, most business would need to get started.”
I agree with a concept statement, though I usually refer to it as a purpose statement (never a “mission statement”).
Many businesses don’t ask the question: what’s the purpose? And, they fail before they get started.
There are many products/services that are “neat-o” or “groovy”, but accomplish jack-diddly-poo…they usually fall by the wayside fairly quickly. (Unless they know someone who has a big wallet and is primarily impressed by colorful logos).
Products/service that have purpose, though, make it easier to see how to improve it, to integrate it into it’s proper market, and usually makes it hella easy to sell (even for non sales people). And, they tend to find their place in the market.
So, I think that codifying the purpose is actually pretty easy. Hence why a concept (or purpose) statement is IMO a good thing.
I like the point of the post though, predicting the future (vis-a-vis dreamt-up cashflow analysis, revenue projects, etc) is an utter waste of time.
CJ Curtis
on 11 Dec 08Anyone who runs a successful business at some point had to have a plan. Whether they wrote it down or not is often times irrelevant.
I don’t have a (completed) formal business plan for a lot of the same reasons you mention…once I get to the financials, I start asking myself, “Why am I making this shit up? I don’t know how much money I’m going to make next year.”
I don’t think writing a formal business plan is AS IMPORTANT as lot of people would have you believe, but if writing things down helps you make important decisions about your business, you should do it.
kangarool
on 11 Dec 08This is a very interesting and timely post in the life of my current business, and another I’m considering starting up.
Hopefully not taking this thread too far away from its origin, could anyone recommend a solid and thriving site/discussion board for entrepreneurial questions and topics like this one?
I’d be interested in discussing this question and others in more depth, and directly with other entrepreneurs, in a more traditional discussion board format rather than linear blog posts and comments. thanks
Two Dogs
on 11 Dec 08I quick word to the wise, maybe taking business advice from the New York Times is not the smartest thing that you could contemplate. They are valued at junk status and Rupert Murdoch is about to raid it.
Just saying.
Berislav Lopac
on 11 Dec 08Revenue forecast is the least important part of the business plan. The most important part is the planning process itself (I see someone has already quoted Eisenhower above), and to have any chance of success you need to know a) what elements you need to make your business a success, and b) how much will it roughly cost.
Oscar Thibidoux
on 11 Dec 08Okay. A business plan has it’s place. However, in this chaotic recession, I’m taking it one day at a time.
Brian
on 12 Dec 08@Mike – Right on. Eisenhower’s quote was the first thing I thought of when I read this post.
“In preparing for battle I have always found that plans are useless, but planning is indispensable. “
Matt – it is a slippery slope you are on here.
“It begs the question: What’s the point of a business plan if it’s obviously a fantasy that has nothing to do with reality? If these projections are just numbers pulled out of thin air, why pay any attention to them? Wishful thinking doesn’t really benefit you in any way.
It seems like most people write business plans just because they think they’re supposed to.”
It’s like the Boy Scout Motto. It’s all about being prepared and being prepared means planning. No one said your business plan has to be 50 pages of fabricated/shoot-for-the-moon data. It can be a couple pages long and spell out what it is you are doing and how you are going to do it. This step can help you not only flush out your thoughts in the very beginning but clue you in to some weaknesses of the business/industry before you get in too deep.
And yes, once you are in the trenches, your plan is going to go to hell. But by that point you will be adapting and moving on. But the plan helped you get there in the first place!
Steve
on 12 Dec 08The financial aspect of a business plan is a horrible ballpark figure for any new venture. Don’t bother with it if you don’t have to.
If you’re entering a very well defined market, do the research and figure out if there is even a chance you can be out of the red in 3-5 years. After that though, throw it away. Don’t waste time or effort crunching the numbers again.
Focus on your mantra, and deal with immediate problems.
Paul Smith
on 12 Dec 08This doesn’t prove that you don’t need a business plan, it proves that you need to take the time to make a good one. It means you have to figure out what you really can do. I think the best business plan is really two. The worst case scenario and the best case. Then you’re prepared for anything ;)
Vladimir Tsvetkov
on 12 Dec 08Jeffry A. Timmons use to say, that “a business plan is obsolete in the moment you print it out”.
The problem is that a business plan is usually given or presented to financiers, but financiers rarely have idea of how to actually create and run a healthy sustainable business and most importantly they rarely invest in the business plan itself. If someone invests his money in your business, it is because you’ve somehow won his trust, but it’s pretty difficult to win someone’s trust over a piece of paper.
So the business plan is not even a ‘loan application’, it’s just a get-someone’s-attention-document. It’s an iteration of the process, and you may need to iterate over and over until you’ve done it right.
kingliving
on 12 Dec 08Well, a business plan might actually help you to a) get money from a bank b) know what you have to do if you want to eat.
It sets goals.
Just because people are stupid enough not to research their business plans doesn’t mean that business plans are a stupid idea. It’s just that stupid people also make business plans!
CJ Curtis
on 12 Dec 08For some reason, a lot of people seem to think that the only person that will ever read your business plan is YOU.
First, nothing wrong with writing a business plan for your eyes only.
For those that write business plans to obtain funding, this assumption is absolutely false. Just like an RFQ response, a grant proposal, job application or resume…it doesn’t necessarily get you the job, but sometimes it is the first impression.
Tomas Buteler
on 12 Dec 08I think this post is biased and misinformed. To look back to the start of a successful business like 37signals and bloat that you did it without doing a business plan is not representative of the whole startup population (and by startup I don’t mean just Web-related businesses). And come to think of it: either you did a business plan and the post is hypocritical, or you didn’t, and your writing about something you don’t fully understand.
You seem to be gifted programmers, and are mavericks in the way you do business, but the vast majority of people that go into business are neither – business plans help those people in many ways.
Of course, if you take another outlier example – someone thinking they can make 100,000 out of extreme niche products, out of touch with reality and based on no market research whatsoever – you’re bound to condemn the practice of creating business plans easily. Business plans are not supposed to be about wishful thinking, but rather force you to actually do some research and conclude if your business is viable or not. And it’s not just about sales, it’s about the bottom line (it doesn’t take much imagination to project how much tax will be payed, how much the rent will cost, etc, it’s all about putting the numbers down and checking the result). Business plans are also useful for pitching new ideas, for getting funding – it’s not about getting the numbers exactly right, it’s about sitting your ass down and getting in touch with reality. The given example did neither, apparently.
If you want to bloat about improvising your moves in the software / Web world, on how you do things without thinking about the numbers, say just that. Don’t take it out on the process of planning investments which is an exercise that, if more people would have done would probably avoid the mess the American economy seems to be right now.
Like many of your posts, and I can’t seem to rid my mind of your Ricardo Semler ones, you have a tendency to write about things you don’t actually experience, or don’t seem to fully understand. Though your influence rests in the good name of 37signals, your words often come out as real bad advice.
michelobe
on 12 Dec 08I created this site in like 5 minutes and it makes me about 5 bucks a month:zen sand garden – that’s a business plan :)
Adam
on 12 Dec 08I understand the importance of not getting lost in the minutae of planning. No battle plan survives contact with the enemy. Nevertheless, a good idea should be followed up with a good plan. Even if that plan is eventually abandoned, it sets the field up to your advantage.
CJ Curtis
on 12 Dec 08@michelobe: how does this make you 5 bucks a month? referrals i’m guessing?
Tim
on 13 Dec 08No business plan that I’ve ever worked on has survived it’s own creation, but that doesn’t mean that it isn’t worth doing them.
Business plans are checklists, as you get started to make sure that you are asking yourself ALL the right questions. Sure, they are out of date almost immediately, so we never put a lot of effort into, like, formatting them nicely. But having a set of questions that we really ought to have thought about in front of us got us to thinking about them, and then some decisions got made.
Tim
on 13 Dec 08No business plan that I’ve ever worked on has survived it’s own creation, but that doesn’t mean that it isn’t worth doing them.
Business plans are checklists, as you get started to make sure that you are asking yourself ALL the right questions. Sure, they are out of date almost immediately, so we never put a lot of effort into, like, formatting them nicely. But having a set of questions that we really ought to have thought about in front of us got us to thinking about them, and then some decisions got made.
Geoff
on 13 Dec 08It seems a business plan isn’t useful to 37s, but I suspect a plan is plenty useful to lots of people. Y’all are producing improvisational jazz. Other folks are writing and performing classical music. One requires a plan, the other doesn’t.
Jeff Takle
on 13 Dec 08As one of the subjects in the quoted article, I wanted to chime in. Every angel group, VC, and individual I’ve spoken with has wanted to see an executive summary—very few have asked for a full “plan” and those that did really weren’t serious. They were stalling.
It’s always seemed to me like the whole plan and 5 year projections were pure posturing. Everybody knows they’re worthless as hard numbers but investors wanted to validate: 1) does this guy think “big?” 2) does he have any understanding at the tactical level of how to get from “here” to “there”? 3) can he stand in front of people with a straight face and tell you he’ll make you 10 million in 5 years? If so, then this is a guy (or gal) who can probably sell, which is certainly one of the most important criteria for running a startup.
And, there are at least some recognized professionals (Jeff Ellis) who advocate only using an iterative strategic process, like “agile development” in software but for corporate strategy. Seemed to make a lot of sense to me.
-Jeff Takle www.RentingYourHome.com
Mitch
on 15 Dec 08Business plan is a analysis tool you use to dissect an idea, plan out the execution.
Will it change? Sure, but how do you know where to start unless you have a plan?
Mr. Darcy Murphy
on 15 Dec 08“Plans are nothing; planning is everything.” Dwight D. Eisenhower
toms
on 17 Dec 08“[...] thinking about the future can help. But writing it down and thinking it’s any sort of plan is foolish. The truth is you’re not going to know what to do until you’re actually doing it.”
I prefer the the short and sweet version: “If you know exactly what you are going to do, what is the point of doing it?” – Picasso
cheers.
The Joker
on 18 Dec 08The mob has plans, the cops have plans, Gordon’s got plans. You know, they’re schemers. Schemers trying to control their worlds. I’m not a schemer. I try to show the schemers how, pathetic, their attempts to control things really are. So, when I say that you and your girlfriend was nothing personal, you know that I’m telling the truth. It’s the schemers that put you where you are. You were a schemer, you had plans, and uh, look where that got you. I just did what I do best. I took your plan and I turned it on itself.
This discussion is closed.