The Irrelevant Business Plan

October 29th, 2008 · Comments · Advice, Entrepreneur, Tools

Alright so you have an idea for a business. Now your thinking I need to start developing this idea. After some thought you decide to go after investor money, it’s just the only way you can really launch your idea. So it’s time to write up one of those 50 page business plans right? WRONG

Now I’m not going to say that at some point a formal business plan isn’t needed (I’ve yet to find out when). But in the beginning don’t waste your time or investors time with a complicated plan.

Recently my business partner and I decided to begin pursuing investors for one of our projects. We have a million ideas and thoughts on how to develop the business but nothing in a formal plan. The first step we took was to write an executive summary. See my Guide to Writing an Executive Summary. Now even these summaries can be 3,4,5 pages long in some cases. How long was ours? 1 page. 1 page to explain what we hope to be a multi-million dollar business. Seems almost impossible right? Or maybe lazy?

It’s not! The 1st investor we contacted got back to us. We set up a phone call and the first thing he said was how he loved our summary because it was only 1 page. I didn’t ask him about all the other pitches and projects he has seen but my guess is they were much longer then 1 page.

Investors don’t have a lot of time. They see hundreds upon hundreds of projects every year. They don’t want a huge plan that takes an hour to read. They want the idea. That’s it! They want to see and understand the idea. If they like or are intrigued by the idea they will pursue further. The investors I talked with didn’t fully understand all aspects of the business but they were able to envision the idea. When they called me they already had a picture of the business in their head and had been able to brainstorm their own ideas for it. This is key. You don’t want a strict business plan that doesn’t allow room to maneuver. Your project will almost never turn out anything like your original plan in the first place. Especially in today’s fast pace world businesses change day to day. Websites get updated weekly with new features or layouts. Nothing is set in stone besides the main idea/focus that the business is based around.

So don’t waste your time writing a 50 page business plan that will only get modified a hundred times before you actually start your business. Spend your time condensing that 50page plan into 1 page (2 pages is fine also). Work on your hook and sinker. Those lines that will grab anyone’s attention and make them want to learn more. Even if they don’t understand everything make them want to learn more or start thinking up their own ideas.

Your more likely to get 50 people to read your 1 page summary then you are to get 1 person to read your 50 page plan.

Anyone else have experiences like this?

Tags: Entrepreneur·Tools

mywifequitherjob

I agree, writing a formal business plan is a big waste of time. It's better to go out and starting doing rather than trying to plan every last detail. In my book, if its a good idea, you don't need a book to describe it. If you can't explain it concisely, then your customers aren't going to get it either.

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Jared

Being short and concise is one of the hardest things to do but it is so important. When you actually start developing your idea is the time to start getting detailed. I think most people really don't understand what a pitch is. It's not a detailed description of everything you plan do and how your doing it. It's a PITCH! Quick to the point get your idea across, if people like it and ask then you elaborate.

Katie Konrath

It's actually much harder to be short and concise in describing your idea. Most people tend to ramble on and on, in hopes of hitting the right note - instead of making sure it's easy to understand the specific benefits of an idea.

While i was studying for my Masters degree at the Institute of Thinking, one of our professors challenged the class to write business plans for our ideas. So many people created complicated plans with 300 components. Most of them spent nearly an hour trying to sell the class on their ideas... with not much success.

My group was composed of all international students and we built our business plan around a very, very simple idea. As international students, we lived in an international residence far away from the grocery store. Since the pipes were bad, we had to buy drinking water - which was incredibly inconvenient.

Our plan was simply to create a buying consortium that would negotiate favorable prices for water for all the 250+ international students in the Residence, and then deliver the water at a set time every week.

Since everyone at the Residence needed water, and the demand was constant, the business was very simple to explain.

Once that was established, we planned to expand to necessities like toilet paper, but we'd only offer things that were nonperishable with a guaranteed demand (in order to keep our risk low).

The idea was really simple, but everyone saw the value in it. We even got an offer to make the business a reality at the end of class.

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