It’s yet another Monday and as usual it is time for our Community Timeout here on the Web Income Journal!
Today I want us to discuss a very important issue that many of us have come to accept as essential when it comes to succeeding in business – a business plan.
A few years ago, a successful business mogul from my area came up with a Reality TV show, “The Apprentice” aimed at selecting a few budding entrepreneurs to be mentored by this entrepreneur who had succeeded in different business ventures.
The first qualification for anyone to be selected for the program was a well written business plan and of course, the ability to defend this plan and being able to convince the Judges that your business was worth it!
Watching that reality show and observing the young men and women defending their business plans immediately convinced me beyond any doubt that it is NOT really the best business plan that makes any one succeed as an entrepreneur.
Now, my conviction then was not because I had any problems with writing business plans but because I saw many of these people speak with passion about their intended businesses but it was clear that many of them do not have the knowledge of writing great business plans!
Of course, as expected many of these ones lost out while those with good business plans, strategically laid out and detailing every aspect of their intended businesses, were selected and given the opportunity to participate in the program.
Now, this brings us to the topic of the day…
Business Plans – How Much Do They Really Contribute To Succeeding In A Business?
Do you really need a business plan before you can succeed in your business?
I decided to bring up this topic after reading a blog post on the Harvard Business Review Blog Network titled, “Great Businesses Don’t Start with a Plan!”
In the post, Anthony K. Tjan, the author of the post, categorically stated that from a survey carried out on hundreds of successful entrepreneurs around the globe, aimed at better understanding what it takes to be an entrepreneur and build a really great business, it was discovered that about 70% of those who succeeded in their business and had a successful exit (that is, an IPO or sale to another firm), none of them started with a business plan!
I’m sure you will want to disagree with that since every business book and advice always go something like this,
“To succeed in any type of business, you must have a business plan. Without a business plan you are heading towards failure because if you fail to plan; you are planning to fail!”
On the contrary however, Anthony wrote:
“[These entrepreneur’s] journeys originated in a different place, a place we call the Heart. They were conceived not with a document but with a feeling and doing for an authentic vision. Clarity of purpose and passion ruled the day with less time spent writing about an idea and more time spent just doing it.”
So don’t worry too much about a business plan. But to guide your thinking, improve a pitch to prospective investors, or better align your teams, consider these design points:
1. Identify and clearly articulate your Heart and purpose. Whether you want to call it vision, Heart, purpose or calling, be very clear on the why of a business — the bigger goal at hand.
2. The team is more important than any idea or plan. The top three priorities should be people, followed by people, and then people.
3. Think big, start small, then scale or fail fast. Per Lederhausen’s advice, set the right first “start small” milestone; it will usually involve seeing people’s willingness to buy or at least try your product.
4. Focus on a well-defined market sub-segment or niche. At least to start, think of where you can potentially be the best. This strategy is almost always more successful than being just another player in a massive market.
5. Understand your business model. How you will make money is more important than pages of Excel showing financials that are simply too hard to predict at this early stage anyway. Understand instead the basic way you will make money – is it through transactions, advertising, subscriptions, etc?
Hmm, you may want to call that breaking the rules to succeed in business!
Your turn: The question is, do you think Anthony K. Tjan and his team got it wrong somewhere? Can you say that from your experience a detailed business plan is necessary before you can start a successful business? Or, do you agree with their findings?
Please let’s have your contribution in your comments below. As usual, make your comments useful and valuable. That way you will be of help to other readers. So the discussion begin!
Image credit: Flickr user – ocean.flynn