Nathan Sykes

April 14, 2021

Business Plans Are Stupid

Unless you're trying to actively raise money, business plans are a waste of your time. Let's walk through what the process of a business plan looks like. You spend some time drafting the executive summary, and you start to go nitty gritty into the details. The products you'll offer. The customers you'll target. That's all well and fine, but then you take a sharp left turn towards no-no land - you start anticipating. Anticipating finances. Anticipating how your prospective customers will react. Anticipating profitability. Anticipating a sale, or an exit.

Anticipation is the name of the game in this context-free paradise - where just you and the perfect scenario of business exist. When you start to introduce context into a business plan, things shift. The numbers and statistics all take a turn for the worse. The customers you counted on when you were crunching the prospective sales numbers in your business plan? Nowhere to be seen. It's just you and a failed idea. No wonder 20% of small businesses don't make it their first year, and 70% of them collapse by the end of the decade.

A business plan - a real, 15-25 page business plan with prospective sales figures, market analysis, competitor overviews, the works - is extraordinarily time consuming. Let me be clear - you should be aware of what your new company stands for, as well as the products you're offering and the customers you're targeting. Maybe a few other stats and statistics. But that's it. Spending any more time on your business plan draws away from what you should really be focusing on - validating your business. I don't mean by doing customer surveys, or seeing what your competitors are up to. I mean by cobbling together a makeshift store/website/whatever and selling your offer to the world. If you're a brick-and-mortar, do a pop-up shop or get a table at a vendor's fair or whatever. If you're online, that's much easier. Grab a template, get a site online, and make sure people actually want what you're selling.

Validating does not equal profitability on day one. You might break even, you might lose a few bucks, or you might make tons of money on the first day you sell. But if you make no sales during the time you're validating, you've just saved yourself a lot of hassle. Imagine if you'd have gone through the process of creating a business plan (a process that experts say can take months to piece together) before finding out that nobody wants your product?

"But Nathan, the point of a business plan IS to figure out if a customer wants it!"

Sure. Probably. But again, creating a business plan takes months (if you do it properly). Wouldn't it make more sense to just spend a week validating 2-3 products until you hit a winner? After you know that there's merit for the idea to proceed, you can knock yourself out! Write as many business plans as you damn well please.

Just don't do it before. Validate.

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