Be Flexible - Assume your business model will change
I read a great post on Seth Godin’s blog today about Starbucks. many people, myself included, praise Starbucks for their brilliant business model. Of how they recognized the need for a friendly place to meet and have coffee at any time of day. Their founders must have been genuis to have that idea right out of the gate, right? But, that’s not what happened. Starbucks started out with five stores and all they sold were beans. And maybe offered free samples. But, they were flexible. They listened to their customers and adapted. And have become an international success.
Have you launched your business yet? Or have you spent the last nine months tweaking your business plan trying to win over investors? Stop! Forget writing a business plan. Make a product. Anything. And start selling it. Then listen to your customers. They will tell you where to go, and if you are flexible, follow them.
I see too many people wedded to their original business plan. They complain about how “no one gets it”. Or how they are “ahead of the market”. You are not smarter than the market. And you are not smarter than your customers.
Too many investors have a similar problem. They sit in their office and filter business plans. As if they were judges in a business plan writing contest. Stop! Get out and go find smart people. Make connections. Get ahead of the curve. Stop complaining about “lack of deal flow”.
My last company, Racemi, started out making blade servers. They were awesome. But the real value was hidden in the management software we created to run the blades. And that morphed into data center management software, the real product for Racemi. The company you see today looks nothing like what was in the original business plan. Five Paces Ventures didn’t invest in the business plan. They invested in smart, flexible people like my partner Charlie Watt.
Make A Comment: ( 2 so far )
2 Responses to “Be Flexible - Assume your business model will change”
Tim Berry
May 25th, 2007
I agree with Paul, although I do see the value in a formal business plan, but at a much later stage.
My advice to fast-growth entrepreneurs who are still in the early-stage is to forego a formal business plan and create a 1-3 pager outlining the gyst of the play. Then, start building. There is no need to write Grapes of Wrath part II.
There is a trend among certain venture capitalists right now that skews away from formal business plans, and more into a 1-3 pager and a prototype (or even better, customers.)
When the time is right for a formal business plan, you’ll know it.
Cheers.
Scott
Scott Burkett
May 28th, 2007
Whoa, I object, strongly: forget writing a business plan? That’s not smart. How about don’t misuse your business plan or don’t fail to review and revise regularly? You’re making the straw-man assumption that planning means not thinking, as in running into brick walls over and over again. Actually planning is like steering and walking, it makes things better, not worse. You’re blaming bad implementation on planning.
Good business plans are always wrong, because nobody predicts the future correctly, but nonetheless, planning is vital, because the only way to manage is by regular review of how, and why, and in what direction your assumptions were off, and what that means.
Tim Berry (blog.timberry.com)