When to write your business plan (vs. customer development)

Posted by: on Oct 10, 2011 | No Comments

Well most people would start the painful process of writing a business plan right away as they have their first idea for their startup, often taking months, just getting ready because that’s what they are trained to do – polish up word and PowerPoint and hone the idea in their minds and those of their friends.

NOT ME! Not any more…

In my view before you do anything you need to do lots and lots and lots of market research with target customers (customer development)  – no business plan, excel or slides – just get a sample of whatever your idea is in as visual a form as possible ( a picture, mock-up, diagram…something potential customers can see, feel, smell, play with…even if it’s a service).

Spend a little time and money on the basic idea and then hit the streets – in my case I am prepared to go anywhere to get market data, for my last idea I travelled to 10 cities across the UK and the USA meeting competitors, potential customers, suppliers, consultants and anyone who could give me useful market data that was ‘visceral’ and ‘meaningful’.

On collation of all of this data, over 3 months, I started a business plan – after I had got many of my assumptions either thrown out, modified or proven – only then did I feel ‘comfortable’ to write something that was realistic.

Most business plans I read lack this clarity of customer driven focus and often feel very light weight and unconvincing as a result.

Now, you may have come from the same industry and been about to beat up your old employer and think you know everything about the market and don’t need to do this…or it may be a totally new concept where you think there is no competition…or indeed you may think you don’t need to do this ‘leg work’ as market data is available in bought in reports. If you think any of the above you will be kidding yourself and by doing so you will be entering a much higher risk situation than is required.

As usual, I give this advice based on my own mistakes and prior experience – I have tried to enter massive markets where there were nice Gartner reports to prove how big the market was and how much my % market share would be worth — frankly all my assumptions were just bullshit and I knew it.

All business plans are a finger in the air, make yours a plan that at least is based on facts gleaned by you, in the very recent past with your real potential clients and you will stand a much greater chance of getting funded and being successful.

So now we write a nice big fat plan then, yes?

NOT ME! Not any more…

Sorry, I am still not ready to write a plan yet – sure I have some mockups and the basis of some market data but I really want some sort of pilot to test these new data points.

I am still testing my idea before I commit to it myself full out so I will put more “seed money” into getting direct feedback on the idea from the public in ‘real life’ conditions.

And it’s also now that I start fund raising…yes! I don’t even have a proper plan yet…

I now gather up as many people in my network as possible and get them to come and see my idea in the flesh, get their opinion, ask for their feedback and advice and ask them who will help me build my dream.

You will be surprised how many people invest in people and not business plans.

If you are being sensible you will try and get a small number of potential business partners, investors or employees to join with you on the ‘test run’. You will all know it’s a test and that it will be a low risk way to try the idea so no-one should get burned as they will know what they in for.

During the pilot phase you can put all the issues around the market, operations, staff, funding, marketing, sales and other expenditures – plus all the unforeseen costs and pitfalls – into the plan for real.

If the test looks good then put the effort into a first class business plan and massive fund raising effort.

OK, frankly most people reading this will probably think – no, I am itching to go I don’t need to do all this – I am a new and intrepid entrepreneur I don’t need to be so conservative I will just go for it.

I know for my first few ventures I did just that but the most consistently successful entrepreneurs are those that take a big risk but minimize as many of the variables and downsides as they can before they jump in the deep end.



Last 3 posts by Jon Gillespie-Brown

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