4 ms·

Mistakes young entrepreneurs make, but don't have to

44 points by pavel 16y ago

mixmax 16y ago
Back in the dot-com days I wrote a lot of businessplans, both for my own things and for others. I excelled at the whole hockey-stick curve and the "we will enhance shareholder value by doing x" (I always put in this Cryptonomicon quote to see if anyone noticed - noone ever did). The businessplans I wrote were flashy, followed the agreed format (index, executive summary, etc. etc.) and sold the product well. What I see now, but didn't then was: 1) The more shiny your businessplan is the more clueless investors you'll attract. (Clueless investors say "oohh that's amazing growth you show in that graph", good investors say "yeah so what, where are the assumptions?" Dealing with clueless investors takes up a lot of time, knowledgeabe investors will back you with a plan written on the back of a napkin if the think you can pull it off. 2) As mentioned in the article, a businessplan isn't a business. I would start to believe my own hype and act like we were all already riding the hockeystick to startup fame. 3) Businessplans tend to get stale, and (bad) investors will expect you to do what your businessplan tells you to do. Even when conditions have changed, which they always do. Now I see businessplans as shallow shiny objects that don't really deliver any value. A one page strategy plan and an excel chart tracking numbers is sufficient, at least in the early stages. Time spent writing a businessplan is much better spent writing code or getting customers.
- veb 16y ago
  I had a business advisor recently on an idea I pitched to the local council (but never heard anything back...) and he absolutely hated business plans. However, if I want to get any sort of Government or Trust funding for any business I want to start, I need a 40+ page business plan. Boring. I agree with your points, it's much better to spend that time writing code and getting customers. I prefer to write concept plans and strategies that take maybe 5 pages instead.
kondro 16y ago
Business plans are very much like 'big design' documentation. If you have a 50+ page business plan that took you weeks to research & write you either become stuck with executing that plan no matter what, or you spend an inordinate amount of time on updating/refactoring your business plan as things change. Business plans for entrepreneurs serious about starting a business (and not just finding VC) should be agile. The first rule of business is that how you see your business structured and operating now will change. So, make sure your planning doesn't eat your life and paralyse your implementation.
Dylanlacey 16y ago
What a stunningly pointless article. I understand that a number of the things in the article are good sense... But they're common sense and also aimed firmly at the middle of the road plans... Average market, average profits, average... CNN reader. I think there's a lot more merit of focusing on building good shit and not shooting yourself in the foot, and showing it to people at the same time. Oh look, HN's persistant theme.

44 points by pavel 16y ago

Back in the dot-com days I wrote a lot of businessplans, both for my own things and for others. I excelled at the whole hockey-stick curve and the "we will enhance shareholder value by doing x" (I always put in this Cryptonomicon quote to see if anyone noticed - noone ever did). The businessplans I wrote were flashy, followed the agreed format (index, executive summary, etc. etc.) and sold the product well. What I see now, but didn't then was: 1) The more shiny your businessplan is the more clueless investors you'll attract. (Clueless investors say "oohh that's amazing growth you show in that graph", good investors say "yeah so what, where are the assumptions?" Dealing with clueless investors takes up a lot of time, knowledgeabe investors will back you with a plan written on the back of a napkin if the think you can pull it off. 2) As mentioned in the article, a businessplan isn't a business. I would start to believe my own hype and act like we were all already riding the hockeystick to startup fame. 3) Businessplans tend to get stale, and (bad) investors will expect you to do what your businessplan tells you to do. Even when conditions have changed, which they always do. Now I see businessplans as shallow shiny objects that don't really deliver any value. A one page strategy plan and an excel chart tracking numbers is sufficient, at least in the early stages. Time spent writing a businessplan is much better spent writing code or getting customers.

veb 16y ago
I had a business advisor recently on an idea I pitched to the local council (but never heard anything back...) and he absolutely hated business plans. However, if I want to get any sort of Government or Trust funding for any business I want to start, I need a 40+ page business plan. Boring. I agree with your points, it's much better to spend that time writing code and getting customers. I prefer to write concept plans and strategies that take maybe 5 pages instead.

kondro 16y ago

Business plans are very much like 'big design' documentation. If you have a 50+ page business plan that took you weeks to research & write you either become stuck with executing that plan no matter what, or you spend an inordinate amount of time on updating/refactoring your business plan as things change. Business plans for entrepreneurs serious about starting a business (and not just finding VC) should be agile. The first rule of business is that how you see your business structured and operating now will change. So, make sure your planning doesn't eat your life and paralyse your implementation.

Dylanlacey 16y ago

What a stunningly pointless article. I understand that a number of the things in the article are good sense... But they're common sense and also aimed firmly at the middle of the road plans... Average market, average profits, average... CNN reader. I think there's a lot more merit of focusing on building good shit and not shooting yourself in the foot, and showing it to people at the same time. Oh look, HN's persistant theme.