4 ms·

It's very hard to argue with this: "Now I'm not suggesting that, just because your company needs a business plan, you necessarily need to hire a high-priced MB

It's very hard to argue with this: "Now I'm not suggesting that, just because your company needs a business plan, you necessarily need to hire a high-priced MBA or consultant to write it. What I am advising is that you take the time to map out your strategy in words and numbers so that you can figure out for yourself where you want your business to go and how you're going to get there. You'll be glad you did."

patio11 17y ago
If I'm going to sit down and spend a few hours writing a work of fiction, mine will have a dragon in it. I can't even begin to describe how many things I "knew" were wrong, and moreover were so disastrously wrong that if I had been committed to them would probably have killed the business. In addition, the things that have really helped me out were not even on my radar screen when I started.
- michael_dorfman 17y ago
  I don't think that writing a business plan implies being "committed" to it, or sacrificing agility, nor does it mean putting away the radar screen once the plan is written. Eisenhower famously found that "that plans are useless, but planning is indispensable." And for many people, the act of writing things down facilitates the process of analysis. I think that history has shown that you, Patrick, have a perpetually up-to-date mental business plan available to you in a non-written form; unfortunately, not everybody is able to do the necessary calculations in RAM.
  - patio11 17y ago
    So in a business plan you might do something like, e.g., crunch some numbers to guess market size, right? Let's see what happened when I tried that, using the facts and model available to me in mid-2006: http://www.kalzumeus.com/2006/06/29/guestimating-market-size/ http://www.kalzumeus.com/2006/06/29/guestimating-market-size... I analyzed, alright. The conclusion I came to -- total addressable market size of 1,500 -- is so ludicrously wrong that it embarrasses me. For added irony, note how I express skepticism that I would actually be able to sell as many as 1,500 copies. On the plus side that blog post probably took me twenty minutes to write and I never actually acted upon it. (By, for example, shelving the software as not being lucrative enough -- I mean, I did the math, clearly it was doomed as a moneymaking proposition.) I don't think most business plans are that cheap and I don't think most folks promptly set fire to them after printing.
    - michael_dorfman 17y ago
      I guess what I am calling for are business plans that are that cheap (or nearly so), and just as flammable. My point is, you did the exercise of trying to figure out your market size. The fact that you were (ludicrously) wrong doesn't mean that it wasn't an exercise worth doing. You obviously thought the project was worth continuiung, despite the (assumed) size of the market, and the same conclusion could have been drawn just as easily if the analysis had been on paper, instead of a blog post. Come to think of it, "business plans via a series of blog posts" isn't a terribly bad way to go at it, all in all. It's certainly worked well for you.
    - jpablo 17y ago
      I'm curious, what's have been the actual market size ?
    - revorad 17y ago
      From this page - http://www.bingocardcreator.com/stats/sales-by-month http://www.bingocardcreator.com/stats/sales-by-month - your total sales to date are around $76,700. At $30 a piece, that's ~2500 copies sold. That's not so bad I think, considering you arrived at your estimate of 1500 by pulling quite a few percentages "out of your hindquarters".
      - tptacek 17y ago
        He came up with a TAM of 1500, not a sales projection of 1500. Normal products capture small fractions of their total addressible market.
        revorad 17y ago
        But if you know there are other products in your space, how can you ignore those numbers when you come up with a TAM? Surely, he didn't invent bingo software?
  - evanrmurphy 17y ago
    Wise quote. If you're open to plans changing, then this is all good. Make a lot of plans, and then don't worry about sticking to them. A different word could help, though. People feel bad when they don't stick to their plans, and so are often led to the extremes of either not looking ahead at all or not being willing to abandon yesterday's forecasts. How about business sketch?
- revorad 17y ago
  What do you have to say about Mark Suster's take on the issue? - http://www.bothsidesofthetable.com/2009/11/03/are-business-plans-still-necessary/ http://www.bothsidesofthetable.com/2009/11/03/are-business-p... I agree that one can't foresee what will work or not. But, not writing down a business plan doesn't mean you don't have one. It probably means you don't want to acknowledge it for fear of being proven wrong.
- fnid2 17y ago
  You write a business plan for the precise reason that you can determine what you should and shouldn't commit to. If something is in the business plan and you knew it would kill the business, then you take it out of the business plan! Business plans are good. They don't have to take a lot of time. I did a business plan and put charts and numbers in it. As the business progressed, without intending to stick to the business plan, the charts have turned out to look almost exactly like the charts I put in the business plan. The numbers are different, but the shape is almost exactly the same. If anything business plans are a way to test your ability to predict the future and nothing is more important in business than being able to predict the future. If you can predict the future, it doesn't matter what kind of business you create, you'll make the right decisions based on your understanding of what the future holds. Of course, you don't need to have an ability to predict the future to run a successful business. Some people make great decisions on the fly. However, it's a really great feeling to look back and see that you have created the life you want intentionally with vision and you know for sure it wasn't just dumb luck. It's a real confidence boost and having known in advance how the future will be play out enables you to make better decisions with the trust of others. Just show them the plan you created 3 years ago and how your business has matched. When you do that, it's easier to convince others that the business moving forward will match your future plans as well. This is true of future partners, customers, and employees, not just investors. I've noticed a lot of people argue certain types of work are irrelevant when they simply don't want to do the work. They'll say, "It doesn't matter to use prepared statements, concatenating strings is fine!" But they're just lazy. It's not fine. Business plans are relevant. Strategy is relevant. Understanding the market is* relevant. Putting it on paper helps others understand what is in your head. Some coders argue that documenting their code is bad too, but that's absurd. Some argue that gathering requirements is irrelevant. "Just iterate!" they say. Hog wash. Of course business plans are good and they do help. You can survive without them, but it doesn't make business plans bad.

patio11 17y ago

If I'm going to sit down and spend a few hours writing a work of fiction, mine will have a dragon in it. I can't even begin to describe how many things I "knew" were wrong, and moreover were so disastrously wrong that if I had been committed to them would probably have killed the business. In addition, the things that have really helped me out were not even on my radar screen when I started.

michael_dorfman 17y ago
I don't think that writing a business plan implies being "committed" to it, or sacrificing agility, nor does it mean putting away the radar screen once the plan is written. Eisenhower famously found that "that plans are useless, but planning is indispensable." And for many people, the act of writing things down facilitates the process of analysis. I think that history has shown that you, Patrick, have a perpetually up-to-date mental business plan available to you in a non-written form; unfortunately, not everybody is able to do the necessary calculations in RAM.
- patio11 17y ago
  So in a business plan you might do something like, e.g., crunch some numbers to guess market size, right? Let's see what happened when I tried that, using the facts and model available to me in mid-2006: http://www.kalzumeus.com/2006/06/29/guestimating-market-size/ http://www.kalzumeus.com/2006/06/29/guestimating-market-size... I analyzed, alright. The conclusion I came to -- total addressable market size of 1,500 -- is so ludicrously wrong that it embarrasses me. For added irony, note how I express skepticism that I would actually be able to sell as many as 1,500 copies. On the plus side that blog post probably took me twenty minutes to write and I never actually acted upon it. (By, for example, shelving the software as not being lucrative enough -- I mean, I did the math, clearly it was doomed as a moneymaking proposition.) I don't think most business plans are that cheap and I don't think most folks promptly set fire to them after printing.
  - michael_dorfman 17y ago
    I guess what I am calling for are business plans that are that cheap (or nearly so), and just as flammable. My point is, you did the exercise of trying to figure out your market size. The fact that you were (ludicrously) wrong doesn't mean that it wasn't an exercise worth doing. You obviously thought the project was worth continuiung, despite the (assumed) size of the market, and the same conclusion could have been drawn just as easily if the analysis had been on paper, instead of a blog post. Come to think of it, "business plans via a series of blog posts" isn't a terribly bad way to go at it, all in all. It's certainly worked well for you.
  - jpablo 17y ago
    I'm curious, what's have been the actual market size ?
  - revorad 17y ago
    From this page - http://www.bingocardcreator.com/stats/sales-by-month http://www.bingocardcreator.com/stats/sales-by-month - your total sales to date are around $76,700. At $30 a piece, that's ~2500 copies sold. That's not so bad I think, considering you arrived at your estimate of 1500 by pulling quite a few percentages "out of your hindquarters".
    - tptacek 17y ago
      He came up with a TAM of 1500, not a sales projection of 1500. Normal products capture small fractions of their total addressible market.
      - revorad 17y ago
        But if you know there are other products in your space, how can you ignore those numbers when you come up with a TAM? Surely, he didn't invent bingo software?
- evanrmurphy 17y ago
  Wise quote. If you're open to plans changing, then this is all good. Make a lot of plans, and then don't worry about sticking to them. A different word could help, though. People feel bad when they don't stick to their plans, and so are often led to the extremes of either not looking ahead at all or not being willing to abandon yesterday's forecasts. How about business sketch?
revorad 17y ago
What do you have to say about Mark Suster's take on the issue? - http://www.bothsidesofthetable.com/2009/11/03/are-business-plans-still-necessary/ http://www.bothsidesofthetable.com/2009/11/03/are-business-p... I agree that one can't foresee what will work or not. But, not writing down a business plan doesn't mean you don't have one. It probably means you don't want to acknowledge it for fear of being proven wrong.
fnid2 17y ago
You write a business plan for the precise reason that you can determine what you should and shouldn't commit to. If something is in the business plan and you knew it would kill the business, then you take it out of the business plan! Business plans are good. They don't have to take a lot of time. I did a business plan and put charts and numbers in it. As the business progressed, without intending to stick to the business plan, the charts have turned out to look almost exactly like the charts I put in the business plan. The numbers are different, but the shape is almost exactly the same. If anything business plans are a way to test your ability to predict the future and nothing is more important in business than being able to predict the future. If you can predict the future, it doesn't matter what kind of business you create, you'll make the right decisions based on your understanding of what the future holds. Of course, you don't need to have an ability to predict the future to run a successful business. Some people make great decisions on the fly. However, it's a really great feeling to look back and see that you have created the life you want intentionally with vision and you know for sure it wasn't just dumb luck. It's a real confidence boost and having known in advance how the future will be play out enables you to make better decisions with the trust of others. Just show them the plan you created 3 years ago and how your business has matched. When you do that, it's easier to convince others that the business moving forward will match your future plans as well. This is true of future partners, customers, and employees, not just investors. I've noticed a lot of people argue certain types of work are irrelevant when they simply don't want to do the work. They'll say, "It doesn't matter to use prepared statements, concatenating strings is fine!" But they're just lazy. It's not fine. Business plans are relevant. Strategy is relevant. Understanding the market is* relevant. Putting it on paper helps others understand what is in your head. Some coders argue that documenting their code is bad too, but that's absurd. Some argue that gathering requirements is irrelevant. "Just iterate!" they say. Hog wash. Of course business plans are good and they do help. You can survive without them, but it doesn't make business plans bad.