BAP#3: The evils of business plan

Published June 6th, 2005 edit replace rm!

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In the last startup where I worked, we halted all my development work to work on various revisions of our business plan a total of 3 times. This worked out to about 4 months of lost time.

In my post mortem of the now failed venture, I believe that focusing on business plans, possible partnerships, lawyers, governments etc. and not on getting ourselves to a live production state (read in business) was what killed it.

The business plan was something that became of outmust importance anytime there was someone waiving a potential sizable check infront of us. The fact of the matter though was that the business plan was nothing more than an unreadable sales document.

We never used it in daily life, which is what it should be.

Most people go out and buy or download business plan templates. There are millions of them out there. They all claim to be tried and tested. The only problem is that they are very time consuming and will never reflect a dynamic growing business.

I think it is much better to create a freeform Business Plan Backpack and ofcourse use Stake It Out to help glue it an other sites together. Here you have a way of exchanging real ideas and maintaining it easily.

Dont worry about top-down, bottom-up marketing numbers, nor outlining the “team” and how you magically will have 135,000 signed up users in 9 months. It doesn’t matter it is all made up anyway. Do not waste your time here.


Will Kamishlian March 15th, 2007

Mmmm…you were in a startup run by someone I’d hire for nothing more than a lemonaide stand, who insisted on multiple iterations of the business plan because he was never quite certain on what the startup was to be, and who fixated on the business plan because it was something tangible for someone who was unable to take any type of management action, all the while being unable to actually compose a business plan himself, and therefore, business plans are bad?

Planning is a means. Yes, if it becomes an end, then there is a problem. Without planning, everything encountered is completely new.

Pelle March 15th, 2007

Your last sentence really expresses what I mean by the article.

Planning is necessary, but in many startups the outcome of planning is a Business Plan document and not the business it self.

This is why I am now pretty much dead set against business plan templates and the like.

Will Kamishlian March 15th, 2007

O.K., then I’m with you. If the folks doing the plan are only doing it to please investors, or because a business plan is de rigeur, then there is no point, and time spent — beyond a couple of weekends — is completely wasted.

I do think bootstrappers might benefit from a custom method for planning. It would seem to make sense for them to plan faster and more frequently albeit with much, much less depth than one finds in plan for investors. Think of it as a journaling exercise that looks forward to set key dates, continually reshape key estimates and tag newly identified opportunities for quick investigation or prototyping. It might also provide an easy way to consciously prioritize competing opportunities, etc.

Such a plan could be something knocked out in no more than an hour on a weekly basis, and it might actually benefit from a dedicated template, provided, of course, that the entrepreneur is thoughtful in preparation. It would also serve as a journal of where the startup has been and what ground has been covered.

About me

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My name is Pelle Braendgaard. Pronounce it like Pelé the footballer (no relation). CEO of Notabene where we are building FATF Crypto Travel Rule compliance software.

Most new articles by me are posted on our blog about Crypto markets, regulation and compliance

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