An Entrepreneur’s View: Uncovering the Inherent Evil of Business Plans
Meet Kalen Barker, co-founder of BlueHollar and one of the companies in the Betabloxstartup accelerator. (Now accepting applications through Dec. 15, by the way). Below, he gives an entrepreneur’s view of the boon and bane that is The Business Plan.
Curious if your businesses is ready to tread this path—or wondering how to craft a plan that will work for your business? Call your KCSourceLink Resource Navigator at 816-235-6500.
Business plans have long been the standard creative document to establish that you and your business are a savvy entrepreneurial duo with an action plan.
Aside from creating a roadmap to success, these plans are mostly used for obtaining funding from a bank or investment firm. If you are starting a business with an effective business model, or a mature startup who has found a solid product-market fit, then a business plan is a quality document worth taking the time to build.
But what does this, seemingly innocent document, bursting with wisdom, actually do to the creative entrepreneur? The creative entrepreneur I am referring to is the one whose business is in the experimental phase, and is searching for their proper modality. Does it work for them, or is it in fact spiral bound with, dare I say… evil?
As the founder and CEO of BlueHollar, a Kansas City home repair and improvement, text message-based concierge service, I am uniquely qualified to give voice to the, yet uncovered, evil that lay dormant in business plans.
I wish that at the beginning I had known to even ask that question of whether or not to implement a business plan. I spent weeks of sleepless nights doing research on my marketplace, competition and creating an operation and management plan, projected financials, projected timelines, projected roadblocks and an executive summary. After sifting through hundreds of pages of research I ended up with a 16-page business plan.
So, it sounds like I did an awesome job doing my due diligence right? Of course it does. I was beaming with confidence as I walked into an investor’s office to hand over my new creation. That's when weird things started to happen…
The investor didn’t even open my business plan. He didn’t want a copy. He didn’t want to see the graphs inside. He regarded my beautiful creation with disdain, as if it were a disease to be quarantined. My pride was quickly deflated and my anxiety swelled as I realized my whole game plan for the meeting had proved itself worthless.
While battling my bruised ego and anxious nerves, he took me to another room and showed me exactly how they used business plans at their firm. “Feel this table,” he instructed me as he gave the table a shove to demonstrate its stability. I agreed with him that the table was sturdy. Then he said, “Now, look under it.” Someone else’s business plan was propped under one of the table legs to keep it from wobbling.
This investor knew something I didn’t at the time. A true startup, such as BlueHollar, have hardly any concrete use for business plans.
My team and I now have a good laugh every now and then at how horribly inaccurate my educated projections were when creating our original business plan. In fact, it was so bad, that it now looks like a business plan created for a completely different company.
Business plans, for startups, don't just qualify as worthless, but also may pave a quick road to failure. If we had stuck to the rigid confines of its $3 per printed page glory, my business would have failed within three months. Let me show you how this evil thing will not only waste your time, but hurt your budding business.
Business Plans Are Bad at Predicting the Future
Projections and guesses about your business model are great. They are a great place to begin to extract data, via thousands of micro-experiments. Eventually these experiments will lead to your real-life, solid and well-functioning business plan. Projections and guesses are not great as a reliable business plan because (unless you possess magical abilities), your model most likely will not work on the first few attempts.
Business Plans Don't Build In Flexibility
Think of your startup as a living thing. As with all living things, it needs room to move and breathe. Business plans don't allow for the flexibility that living startups need to ultimately succeed.
Once you have a solidified business plan, in writing, it will provide reason for rigidity. In the majority of cases, flexibility will be the required, key ingredient for decision making. On the road to your businesses success, a business plan may influence a continuance along the same course, but all the collected data from the experimental phase is begging you to take a hard left, instead.
Business Plans Hold You Back
Businesses can take months, if not years, to develop a well-researched business plan, all in the hope to obtaining funding. Why waste months, or years, on a business plan that could end up hurting your business in the long term? My advice is: Don't waste time. Just get to work.
Business Plans Can Make You Feel Foolish
A business plan forces you to invent data, out of nowhere, from nothing. Without data (because you have little to none at this point), all of your data points (the backbone of your business plan) will be proven wrong, as you begin to collect actual true, hard data. This can hurt your credibility and posture as the leader of your business, and also leave you feeling quite disoriented along the way.
So How Does a Startup Plan?
After the investor that I visited candidly displayed his use for business plans, and after feeling quite foolish, he lead me to the Business Model Canvas, also known as the Lean Canvas Model. The BMC.
The Business Model Canvas is a powerful and useful framework that every true startup should be using to guide their new venture into success. It not only replaces the traditional business plan, but forces you to categorically evaluate yourself and gives you room to grow and change within each category. In the near future, I am devoting a separate article to the wonders of the Business Model Canvas. In the meantime, I recommend reading this.