If the business plan is bad… it is a waste of time

14 Apr

I was watching my Twitter feed this morning and my eye caught this:

Considering that my company is all about entrepreneurial tools, and has some great business planning tools and content, I was interested to read what John Warrillow had to say about market research and writing a business plan. I immediately agreed with the tweet, that market research is critical before you write your plan. Much to my horror, the title to the article is actually: When Writing a Business Plan is a Waste of Time . I jumped right into the article, to see what this writer had to say, and why he was proposing that business plans were a waste of time. The more I read, the more horrific the article got. It turns out that this writer wrote a very bad plan, with very bad assumptions, and took a very long time to do it. He didn’t research his plan, and didn’t understand basic assumptions that he could have easily researched for his industry. Instead, he started out with the premise that he wanted to make 1 million dollars in his first year, rather than researching, understanding industry ratios, and understanding what it would take to sell his product to his market. Seriously? I mean who doesn’t want their startup to reach a million dollars in the first year? I also would love to have a perfectly flat stomach, and could just wish it, without understanding what it actually takes to get that flat stomach at my age after three children.

Just because his assumptions were bad, not researched and poorly thought out does not mean that it was the plan’s fault. He should have spent more time researching and less time writing a perfect document. There are places that give you information about standard ratios in an industry, such as customer acquisition cost and average percentage of revenue that needs to be spent on marketing. All plans are guesses, but there is a difference between a completely uneducated guess with no research, and one that is made with a lot of thought, research and information (an “educated” guess).  After reading his article and sharing it with a few co-workers, we started coming up with a few more titles where we can blame the tool rather than the user:

  • When using a bat is a waste of time. This article could complain about how the bat just didn’t do the job- it never hit the ball. Why bother using the bat if it is never going to hit the ball?
  • When being on a diet is a waste of time. This article could complain that a diet of Twinkies and Bon Bons didn’t make the writer lose weight. Why bother going on a diet if the diet doesn’t work?
  • When driving a car is a waste of time. This article could complain about how driving a car without proper directions is a waste of time. That the only thing driving the car did was make the driver get lost and miss out on activities planned for the day. After all, getting lost was definitely the car’s fault.
  • When using a MAC produces terrible design. The writer of this article could complain that even after buying a MAC, he still could not produce beautiful designs, and using PhotoShop was still hard. I mean, really, isn’t it a given that if you buy a MAC, everything you do looks beautiful?
  • When running shoes don’t make you run fast. The writer can complain that they bought the “right” running shoes, but they still did not win the race. I mean really, what gives, shoes?

You get the point. So, does John Warrillow really believe that writing a business plan is a waste of time? Or does he understand that using a headline like that will attract more readers and get more traffic to his article? Does he really believe that a startup should not plan at all, just jump in blind and see what happens? That there is no value in planning and understanding the business that you are getting into? A good business plan will never be completely right. It will always be a moving target that helps you prioritize what you need to do, and understand what works and what does not. A good business plan will help you set the right goals and objectives, and then measure results. If you can write a plan that is completely right, then you should be a stockbroker and make a lot of money because clearly you can see the future. But for the rest of us, planning is a way to make sure that we are on track. It is also a disciplined way to do the right research and make sure you are using the proper assumptions to plan your business. Please don’t do what John did–pick a random assumption out of the air, and then build your plan around it. Take the time to research your business and your industry, and you will find that you write the right plan and help your business tremendously.

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One Response to “If the business plan is bad… it is a waste of time”

  1. Jane C Woods June 29, 2011 at 8:03 am #

    I LOVE the Twinkies and diet analogy-Brilliant! Did you debate with him further on twitter?

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