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Wednesday, March 31, 2010

Why you should NOT write a Business Plan...

... & 10 better things to do to ensure success !!...
by David Bookout

Perhaps, you too have seen the recent ads for a new business plan template ? The ads seemed to be on every website I looked at yesterday morning, which prompted this post. The are a number of problems with the whole BPlan concept as I will outline briefly below, but the biggest problem is that business plan writing, for the most part, is a complete waste of time. Really, come on, how many business plans have you ever comprehensively read ? More importantly, how many business plans have you regularly reviewed, let alone followed in your day to day activities within a business ? Be honest.

Business plans are simply a business 1.0 tradition, relics that need to be replaced. What is needed are "Thinking Platforms" like the one we invented here that provides for derivative tools that facilitate business unique effective action on a daily basis.

Here are five reasons why the current business plan thinking is flawed:

A) Lack of differentiation ~ Template plans don't differentiate business concepts. Instead they foster a lumping of your business into a ho-hum pot of business similarity.

B) Lack of thinking ~ Template plans don't generate thinking. Instead they foster "go to the freezer, get the box" list checking, cutting and pasting.

C) Time ~ Custom plans take too much time. While you're in writing your plan, someone else is out validating and selling.

D) Change ~ Change, the biggest flaw factor occurs faster and faster. Technology, demographics and competition are all changing faster than people actually take the time to document in a business plan.

E) A Plan Is NOT Planning ~ Planning is a recurrent process. A plan, in this context, is something typically done once.

F) No one cares ~ Most active entrepreneurs seeking funding will tell you that they invariably NEVER get asked for a BPlan. Instead they get asked for Elevator Pitches, Executive Summaries, and Pitch Decks.

And, as promised, here are 10 things that you would be better off doing:

1) Talk ~ Talking with your desired audience. Call them on the phone. Go see them. Speculate with them, and most importantly LISTEN CAREFULLY to what they have to say.

2) Segment ~ Define specific user groups by their specific concerns. Refrain from staying too general in your work. Specific, valuable solutions drive the highest revenues.

3) Rank ~ Make assessments regarding user concern importance. This is the beginning of your value proposition work. It is also the basis of your design work, and should be revisited and revised often during the initial process.

4) Design ~ Sketch out solutions that address specific user groups and their specific concerns. Beware of committing too much too soon. This is where the costs are that drive business extinction.

5) Validate ~ Again, go talk to your desired audience segments. Use your ranking work to determine where to focus. Again, LISTEN CAREFULLY to what they have to say. Don't defend. Speculate. The right conversations at this stage of business offer development can lead to your customers literally designing your solution for you. Nice, if you can get it.

6) Re-Rank ~ Revisit your ranking work and change accordingly.

7) Refine ~ Shift your design sketches to more comprehensive solution sets. This is where your product roadmap comes in. If you don't have a product roadmap, you don't have enough information. Don't forget that this is another level of detail in the design of your offer, and your chances of having everything all figured out is slim to none.

8) Re-Validate ~ Again, go talk to your desired audience segments. Follow the re-ranking work. Make sure you are getting recurrent feedback from the same people. Avoid weighting one off feedback too heavily. Still LISTEN CAREFULLY to what these people have to say. Again, don't defend and speculate. Test trial closes.

Gather your information, it's critical decision and commitment time.

9) Build ~ Produce the simplest, easy to use, most compelling solution at the lowest total "cost". This doesn't mean the lowest "price". Sometimes things that seem inexpensive are extraordinarily expensive over the long haul. Build in flexibility. Things will change. Avoid feature creep.

10) Go Sell ~ The ultimate validation is a paying customer that would gladly repeat the process tomorrow. Not that they necessarily would, this is about satisfaction and the dreaded buyer's remorse. Repeat, repeat, repeat...

When you've done this list, in this order, and still think you need a business plan, let me know.

© Copyright 2010 - Effetti, Inc. All rights reserved worldwide.

The "Wasting Time" image may be © Copyright to and was found @ PinkForSure.com

5 comments:

Soulati said...

I am in full agreement, David! Thanks for this in-depth review of why/why not.

BUT...! I run across so many would-be entrepreneurs who sadly have no concept of even tapping/touching/launching a B-plan, whether apropos or not. I firmly believe the exercise, whether or not futile, is critical for some folks to get to the truth. Are they wasting time? Do they really want to launch a business?

Your points are on target for the advanced business person who would get in front of VCs and ask for funding w/ messaging, decks and elevator pitches.

Can't wait to see more from you!

Thank you!

Effetti said...

Soulati,

On the BPlan "exercise" I couldn't disagree more. The point, which perhaps I didn't make well, is that the 10 steps really need to be done BEFORE any real business planning can occur. I say this because any product / service idea ( business offer ) that can't locate paying customers has no chance of becoming a business.

Also, I would offer that an advanced business person knows these steps well. However, there are exceptions here too, as many corporate folks are blind to the structure they have been surrounded by and that blindness causes failure.

Ideally, it is the person that is thinking about starting a business on their own for the first time that should start at step one.

Success is about effective action. Taking the right steps in the right sequence.

Appreciate your comments, and encouragement, thank YOU !!

Sincerely with the best regards,
David Bookout

Soulati said...

Thanks, David. You're smart and a would-be entrepreneur can be too by aligning with you!

Effetti said...

Thanks, Jayme, appreciate your kind acknowledgement !!

If you will excuse the shameless plug => Our strategy tool set, here ( http://bit.ly/cqFdnu ), enables anyone thinking about a new business venture, or product / service release to think about and design more effective strategies.

Cheers,
David

Chris said...

Nice post David!

You are right, it seems that business plans are a complete wastes of time in business.

I do believe it is important to have a business growth strategy, but a business plan is very "old school".



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