Wednesday, September 18, 2013

Don't Fear The Business Plan...

Many an Idea Generator (someone with an idea for a business start-up) has said, “I've got this great idea; I just do not know how to do the business plan for it.” 

My response is usually something such as, “don’t worry about it … at least not yet… there is no need to fear the business plan!” 

At this early stage of your idea, the focus needs to be on creating experiments that can validate what you really need to learn about your idea in order to help assess its true potential. Fundamentally, you’re hoping to become a startup that can innovate its way to a real business, and so putting together a 3 to 5 year, highly detailed business plan spreadsheet at this stage, is simply the wrong use of your effort. 

Instead, use tools such as the business canvas, and in a single page, you'll be able to list the necessary elements for a business plan that is more appropriate for this stage of your idea. What’s more, as you edit the canvas with the results of your learning experiments, over time, you’ll be capturing all the nuanced detail that can be turned into a full-on business plan later down the project’s pipeline. 

On the Canvas, you'll collect information about the basic problem your idea is working to solve, the basic customers you're going to target, typical revenue and cost elements, what channel(s) of distribution you’ll use to get to market, key partners and resources you’ll need, and more. 

You’ll do it all in a simple, post-it note fashion which ultimately will combine to give you a perfectly adequate start for your business plan that matches the stage of your idea’s growth reality. If you have worked your Canvas over well enough, everyone will be able to see the business potential in your idea quite adequately for this early stage of the process. 

Check out the following tools just waiting for you...

Of course being a good entrepreneur or even an intrapreneur (an entrepreneur inside a corporation) you are going to want to “please” the system by completing a big, fat, multi-page, 3 to 5 year document with detailed internal rate of return calculations and all sorts of other metrics (important later, not now) and you’ll call that your business plan.

My advice is simple: Don't do it; resist the temptation at this stage as your idea is far too fragile and far too uncertain to spend your time developing a multi-year plan for which the only thing you can be certain about is that the plan will be wrong.

Instead, create hypotheses, run experiments, and validate the learning you need in order to determine if your idea is on a good track, or needs to pivot in order to survive. There will be plenty of time and help from myself and others (if you like) for building detailed business plans down the road.

Don’t fear the business plan. Take your idea to the Canvas and learn!

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