Instead of starting with a plan, some businesses started with a Heart. They followed their emotions and actions to realize their true vision. They focused less on writing about their idea and more on making it happen with a clear purpose and passion.
Business planning is not always bad. But trying to write the “perfect” business plan can make you wrong in every detail instead of right in the big picture. One issue is that most people focus on things in business plans that have little to do with what will really happen. Many start-up plans show some huge potential market and how getting a tiny slice of it will make them and investors rich. A business person selling a soap bar for a dollar every month to just 0.5% percent of the people in China. It sounds like a $100M business! But good luck making it happen.
When a business starts, resources are scarce, and the best content for a business plan is real-world data based on testing parts of the idea. These experiments need not be complicated. You need simple, iterative tests that are easy to measure and tell you whether you are succeeding or not.
It’s not only for start-ups. The strategic framework of any business should include facts from real world testing to allow one to change course as needed. This is what Henry Mintzberg, a key figure in competitive strategy theory, once called “emergent” or “evolutionary” strategy. A business person Mats Lederhausen (who used to be the global head of strategy for McDonald’s and the Executive Chairman of Chipotle) has his own way of saying it: think big, start small, then scale or fail fast.
So don’t worry too much about a business plan. But to guide your thinking, improve a pitch to potential investors, or better align your teams, consider these design points:
- Identify and clearly articulate your Heart and purpose. Whether you want to call it vision, Heart, purpose or calling, be very clear on the why of a business — the bigger goal at hand.
- The team is more important than any idea or plan. The top three priorities should be people, people, and people.
- Think big, start small, then scale or fail fast. Per Lederhausen’s advice, set the right first “start small” milestone; it will usually involve seeing people’s willingness to buy or at least try your product.
- Focus on a well-defined market sub-segment or niche. At least to start, think of where you can potentially be the best. This strategy is almost always more successful than being just another player in a huge market.
- Understand your business model. How you will make money is more important than pages of Excel showing financials that are simply too hard to predict at this early stage anyway. Understand instead the basic way you will make money – is it through transactions, advertising, subscriptions, etc.?
There seems to be a constant market for how-to classes, books, and templates that promise almost “color by number” instructions for filling out business plans. While some of those tools are helpful for a structured approach, they are more likely to mislead because of their emphasis on completing the plan of a business before discovering its soul and showing whether others connect with it. People feel a sense of accomplishment after completing their plan, but what does that plan really get them? Filling worksheets can never replace focusing on the passion and purpose of your business. That Heart has to be there from day one. The most researched business plan holds little value without a genuine Heart behind the idea and the Guts to just get it started.