When it comes to developing a company many of us start with the plan of plans: the Business Plan. Oh how we love to sit around write down our ideas, sum them up into something easily grasped and interesting for investors, and then flood it with assumptions of why the data and information we are giving is correct. We here at Gumption Entertainment and Promethean ProVisions are very familiar with the Business Plan:
· We are startups and had to go through the process of writing a Business Plan· We help get films funded by writing Business Plans
Even though we write Business Plans I struggle with them constantly. Not in developing them, but in what they portray. Here are a few reasons why:
• Assumptions! So many parts must be assumed. We all know what assuming does.. • Predictions! I personally cannot predict change. If you can please send me some of your powers! • People! I love people! However, I cannot guess what any one person will do or think.
The last point is what really gets me. In order to fill in so many of the blanks and have a solid grasp on our success or exit strategy we must know how people will react. In order to do this, we just assume and predict how they will react.
What a flawless way to know we are right! Am I right!?
I don’t think so..
So, I was reading more in order to get better understanding of how to streamline the process. This is when I realized I was missing a key connector to the missing pieces!
First, assumptions are terrible, and predictions based off of assumptions are even worse, and lastly assuming and predicting what people will do on a piece of paper without first hand experience is brutal. For a lot of startups this may be the first time getting something from a spark in the brain to a piece of paper to a profit.
In order to do this we must assume and predict OR we can go out there and experience how they react and how we will react!
Check it out here at How: the worst, most asked planning questions. Chuck Blakeman goes on to say, “The problem is life. A Harvard researcher found that 97% of all businesses leave their prime objective in order to be objective. The farther out we are planning, the less likely it is to work out.”
Then we have Steve Blank in his article No Plan Survives First Contact With Customers-Business Plans versus Business Models. In this article he says, “No plan survives first contact with customers.” He goes on to give an example of an ex-student of his and says, “The problem was that two weeks after they got out of the building talking to potential customers and user, they realized that at least ½ of their key assumptions in their wonderfully well crafted plan were wrong.” He then goes on to explain the difference between a business plan and a business model. “A business model describes how your company creates, delivers, and captures value.”
Then we have Steve Gedeon with some great points during a video titled Steven Gedeon on the Purpose of Writing a Business Plan. He says, “I find writing to be a guide to thinking. So one reason for writing a business plan is because it forces you to subject the thoughts that you have to the real world. Then you are able to say wait a minute A doesn’t lead to B doesn’t lead to C.”
This leads me to a suggestion for Business Plan Development.
*Try developing a business model *Use that business model and test it in the real world *Don’t get caught up in a web of “In Theory” *Don’t just use assumptions and predictions *Find your companies value and plan for now, don’t get caught up in all of the minute details of too far in the future
This week try to sit down and evaluate your position and your business plan. Start to prepare it for subjective testing in the real world and grow and change as your industry demands.