Let’s face it, business planning can make startup founders cringe. The mere mention of those two words conjures up images of a multi-paged box filling exercise, with some lengthy future financial projections that are nothing more than a shot in the dark as to what a business could be. All incredibly uninspiring and of questionable added value. But is that what a business plan has to be or have we just got used to ‘traditional’ definitions? It’s definitely time to change the way we think about business planning for early-stage businesses because we all know the traditional approach doesn’t work.
Business planning has become a dirty word in the startup scene. And with understandable reason. Whether you’re pre-launch, or in the early revenue stages, the idea that you can predict the future course of your business for the next few years does seem quite ridiculous. Apparently it was German Field Marshall Helmuth Von Moltke the Elder who, in the 1800s, said that “no plan survives first contact with the enemy”. Startup guru Steve Blank put a business slant on this and said that “no business plan survives first contact with the customer”. With good reason he encourages startups to focus on their business model because a “plan is static [but] a model is dynamic”. But if we throw away the traditional definitions and think a little differently about what we mean by business planning then I feel strongly that there is another way.
Last year I started my own business. I didn’t write a traditional business plan. But the notion that I would set up a business without any sort of plan seemed ridiculous and actually quite dangerous. Instead of thinking about a business plan I prefer to think about a plan for my business. Same words, just in a different order, and with a totally different approach. I call it intelligent business planning.
My intelligent business plan is on a large whiteboard in my lounge at home. Underpinned by some very thorough (and ongoing) analysis, it identifies my strategic objectives and is segmented based upon my key propositions and my market. I use colour coded stickies that relate to the status of my work (green are Active Projects, orange are Open Opportunities and pink are Future Potential Opportunities). At the bottom is a timeline that looks only 3 months into the future as I focus only on what I call proximate objectives. On an A3 sheet of paper stuck to the wall next to my plan I have a competitor grid so I always know where I fit into the competitor landscape.
Granted, my intelligent business plan doesn’t really look pretty but it works. I also need to be clear that my whiteboard is not just a project plan, that is something very different. Neither is it a visual representation of a methodology (lean startup or otherwise). I look at it several times a day and move the stickies around to adapt to changing circumstances. I can write up new thoughts in marker pen and scrub out old ones if I have not been able to validate them. If I identify new competitors or market players that I should be aware of then they go straight up on my grid following a quick assessment.
Business plans mean different thing to different people and it’s very important to say that their structure needs to be adapted according to the situation. Do you need a plan to manage your own internal business activity? Or are you going for investment from the bank, an angel or otherwise, in which case you need a more traditional document. Be clear (and honest with yourself) about your reasons for producing a business plan and be as creative as possible about how to structure and visualise it. Planning for your business can actually be real fun and a well structured and coherent plan really will make a huge difference to your own confidence and the success of your business.
image credit: gaumina.ie
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Richard Hughes-Jones is an experienced management consultant, having spent most of his career with Deloitte UK and working in a senior management role for Her Majesty’s Treasury. He now works with high growth businesses, bringing strategic business thinking to support sustainable growth. Richard blogs about a range of business issues at FireLDN and is on @rhughesjones