

When was the last time you looked at your business plan? - BvS
http://www.37signals.com/svn/posts/1457-when-was-the-last-time-you-looked-at-your-business-plan

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swombat
As posted on their site...

“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 37-signals, 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 is very important. A business
plan can do just that, and all that for only a handful of weeks of work on the
side... seems like a bargain.

I’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.

~~~
webwright
re: #1, "Common Vision": You don't need to write a plan to have a clear/common
vision. A conversation and a short written paragraph or two does the trick. I
agree that written documents can provide some clarity.

re: #2, "Ensures token thought to key elements of a business": If you need
artificial structures to ensure that you think about something important,
you're in trouble. Sure, whip up a spreadsheet with some prices and churn
numbers to get a sense of the scale you'll need for a SaaS offering. Sure,
poke around at ad rates in your vertical if you're going ad-supported. But the
key is thinking about it and learning about some of the realities-- not a
formal document.

re: #4 "a management/coordination tool" - Huh? In a 4 person business, people
are going to refer to the business plan to know what they should be doing?
Naw, they should be referring to customer feedback, 1-page feature summaries,
visual prototypes, notecard stories, and app/biz analytics....

The point of their gripe is that things change. Dramatically. You'll look back
at the assumptions that are core to your business plan and laugh about how
stupid you were (I know I would if I'd written one). Some of the exercise is
valuable-- to stretch muscles you're going to need (thinking about
monetization, distribution, etc)...

But at the end of the day, it's usually akin to a virgin trying to write a sex
manual-- no amount of research/planning is going to make it a good/accurate
plan.

~~~
swombat
_But at the end of the day, it's usually akin to a virgin trying to write a
sex manual-- no amount of research/planning is going to make it a
good/accurate plan._

It doesn't need to be accurate. Even a virgin can benefit from thinking about
what he's going to be doing once it all starts happening. I'll also add that
running a business is a lot less instinct-driven than sex (well, for most
people... I know some exceptions!).

 _rere: #1_ \- it's quite possible that a short paragraph is not enough to set
out all the key elements of a multi-year venture. In my experience, in fact,
that's pretty much always the case.

 _rere: #2_ \- Not everyone has been running businesses since they were born.
Artifical structures help in running a business just as they help in many
other things.

 _rere: #4_ \- you don't need to refer them back to the plan all the time, but
it helps split up all the stuff that needs to get done so that it's easier to
assign ownership for chunks of it. Of course in a start-up everyone does a bit
of everything, but that doesn't mean everyone should step on each other's feet
constantly.

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ocskills
It's the act of developing a business plan that is important, not the plan
itself. There is also much more to a business plan than just projecting
revenues.

If you are realistic, planning forces you to actually _think_ critically about
things like startup and ongoing costs, cash flow, suppliers, sales pipeline,
time/resource requirements, the window to achieve profitability before you run
out of money, and most importantly the critical steps you need to take before
you start.

After you're in business the game changes. Then it becomes much more about
flexibility and adapting to new information and changing situations. There is
no doubt that if you blindly stick to a plan no matter what your business will
fail, but this doesn't discount the value of the up front planning process.

------
michael_nielsen
"In preparing for battle I have always found that plans are useless, but
planning is indispensable. " - Eisenhower

~~~
astrec
And "No plan survives contact with the enemy." - Helmuth von Moltke

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dawie
I think that a Business Plan is a working document that needs to change and
evolve with the environment that your business is in. What I like about a
business plan is the fact that it helps you to think about how you are going
to run/operate your business and to put in down in writing forces you to think
about it.

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vaksel
when I wrote it...I honestly can say that I haven't opened that file since.

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jasonmcalacanis
I'm sorry, who writes a business plan these days? Just find a great market,
build a great team and relentlessly build your product.

Business plans are for suckers.

~~~
ryanwaggoner
Failing any of those, just relentlessly promote your product ;-)

I kid, I kid...

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epi0Bauqu
Never bc I never wrote one.

