When my brother, Aaron, and I started SafeBrowse.com the first step was to write a business plan. There was no second step until step one was done. In fact, I was so dedicated to the business plan process that I have a version for each of our first eight years. It seemed to me that if you wanted to build a good business, you had to have an up-to-date business plan close at hand.
I recently had the opportunity to have lunch with a friend who is in the process of starting his own business (check it out at www.myersaudio.com). One of the things he mentioned is that he had already written his business plan. This got me to thinking about whether or not I still think a business plan is as important as I once thought it was. I don’t think they are, and here is why?
1. Your business is probably being started in your spare time. This makes your time even more valuable than it normally is. Rather than spending 40+ hours drafting a document that nobody is going to read, invest that time in building your product, or launching your website. Jon Spoelstra in his book, Marketing Outrageously, urges his readers to daily ask themselves, “What have I done to make money for my company today?” Writing a business plan is not a valid response to that question.
2. You don’t know what you don’t know. I know this sounds obvious, but you cannot write a 3 to 5 year plan for your business before you have a product, your first customer, or any experience running a business. A business plan is a like a new car — it is worth less than you paid for it the second you drive it off the lot. Right after you complete your business plan, chances are something will change making your document worth less than the paper it is printed on.
3. You should be so excited about your new business that you are irrationally unable to be objective about it. This means that any customer or sales projections that you put in your business plan will be grossly inflated, and it will take you twice as long, and cost twice as much as you think to build your product. Rather than writing a document that will only serve to depress you in a few months, harness your excitement to get your product to market.
The question you are probably asking at this point is, “There must be a situation where having a business plan is important?” There is. If you plan to seek venture capital funding for your idea you may need a business plan. Although I doubt anyone will ever read it. Venture capitalists already assume you don’t know what you are talking about, and that your numbers are inflated beyond what you can hope to achieve.
My advice is this: Get to work building your business, not sitting behind a computer dreaming about it.