In the words of Will Schroter CEO of Go Big Network
Get Customers First and Then Write a Business Plan
If you’re thinking about starting a company, please don’t write a business plan. Stop, put the keyboard down, and step back. You’re wasting valuable time.
Don’t get me wrong, I’m not suggesting that you run aimlessly into the startup abyss. What I want you to avoid is the black hole of planning that most entrepreneurs get into when starting a company. They get sucked into a time warp where a formerly great idea gives way to months upon months of “thinking” about the idea instead of just making the damn thing happen.
If Nobody Buys, it’s Not a Business
The first step, before writing a plan, is to validate the concept. If nobody will ever buy your product, it’s unlikely that a business is ever going to form. Focusing on the product first, and more specifically the customer’s willingness to buy that product, is by far the most valuable time you can spend early in your business.
In addition to validating your concept, selling the product early allows you to prove some key assumptions in your plan before you begin writing it. For example, wouldn’t it be helpful to know what someone would pay for your product before you built it? You would be surprised how much information you can gather from potential customers just by asking them what they would pay for a hypothetical product. “If you build it, they will come” might have worked for Kevin Costner in the movie Field of Dreams, but it’s a formula for disaster in a startup.
The Prototype Company
Sometimes finding out early that your idea isn’t as viable as you thought is a blessing. Instead of spending months writing an elaborate business plan on a completely unproven idea, try putting together a “pre-business plan” that consists of only about five pages that quickly communicates your idea and focuses on the key assumptions that drive your business. These key assumptions are often questions like “Will people buy the product as I’ve defined it?”, or “what will they pay?”, or “how much would it cost me to sell this product?”.
Imagine that the first few months of your business are really more like a great big “prototype company”. Focusing strictly on the sale of the product and proving your assumptions, even on a small scale, will allow you to write a far more comprehensive and viable business plan when you are ready to formalize your thoughts. Additionally, you will be able to make much more accurate forecasts on the business when you get a sense for what it really takes to market, sell and deliver the product.
Your Business Plan is Not an Application for Capital
It’s a common misconception that investors want to see a business plan before they will consider investing in a concept. That’s not entirely true. What investors want to see is that you can demonstrate your ability to sell the product to paying customers. Ask anyone (even yourself) who you would rather invest in – a startup company that is making money without a plan or a business plan that isn’t making any money? Writing long, elaborate papers might have impressed your instructors back in college but it won’t win you any points with investors. They want results, not ideas.
Keep the Plan Simple (and listen!)
Despite what you may have heard, most of the best business plans are as simple as possible. It’s far more important for you to demonstrate that you can solve one market need incredibly well than being able to show you’ve thought of every possible market niche and have included it in your plan. Think quality over quantity.
The process of writing your business plan isn’t to show off how much you know about a concept. The most important aspect of writing your plan is to become a voracious listener. Listen to what your potential customers are telling you they want in a product. Listen to what they are not getting from the existing products. Listen to what investors are looking for in the companies they put money into. Your business plan should read more like a record of all the valuable information you have heard, presented in a meaningful way that makes the case for your company’s potential success.
Put Down Your Pen and Pick Up the Phone
You’re much better served to do your business planning by picking up the phone and asking customers to buy than you are in writing an elaborate plan. In fact, the more you speak to people about how they will respond to your idea the more likely you will write a much different plan that is based on real world findings.
Great companies are born from action. Now go sell something!
Focus is the Key to a Successful Startup
The definition of a startup means you have very few resources to employ and little time to get them to do something valuable. The clock is always ticking, and the money (if you even have any) is running out by the day. With so little to leverage, you need to make sure that the focus of your company's product offer is as razor sharp as possible.
Don't be all you can be. Be as little as you can be.
Most startup companies fail because they try to be too many things to too many people right from the onset. They think of every possible option they could load into their product offer. While this may give them the feeling of being one of the “big boys,” the grim reality is they are not. In fact by trying to be too many things from the start, these companies often end up delivering no real value at all.
Instead of trying to be all things to all people, try being one thing to all people. Think of PayPal, the highly successful startup that allowed users to e-mail money over the Internet to each other. PayPal could have chosen a million options for their offer. They could have become an on-line credit card company, an auction site, a loan provider and so on. But what made the company successful was their focus on only one offer – e-mailing money from one person to the other.
PayPal did one simple thing so well that the industry giant eBay purchased them for $1.5 billion in 2002, even after eBay had already built the same service themselves. PayPal is a great example of a company keeping a sharp focus one doing on thing right even when so many great opportunities could have easily distracted them.
Bite off less than you can chew
Delivering your product to market is an amazing feat to begin with. Even still, a common problem among small companies is their inability to predict what it will take to actually support a product once it has gone to market. It’s easy to conceive complex products with lots of features. But actually bringing that product to market and supporting its use with customers is a whole different story.
Instead of trying to roll out everything and the kitchen sink in your approach to market, just roll out the sink. If you find that you can support your product just fine after it’s been successfully selling in the first year, then go ahead and add to it. It’s a lot easier to add features along the way than it is to support features you don’t have the resources for to begin with.
You have ten seconds to get it right
Your customer has a life, even if you do not. They are being constantly bombarded with marketing messages from the latest movie releases to the newest type of shampoo. They don’t have the time or energy to stop their entire day to focus on just your product. So if you are lucky enough to have ten seconds of their attention, you had better make good use of it.
The exercise of developing your value proposition in ten seconds is a great way to distill down your feature set to those items that will get people’s attention right away. If it’s not going to add value to the ten second pitch, it’s not critical to your product’s success. If you can’t get your customer’s attention with the one key benefit to your product, the rest of your features will never see the light of day to begin with.
Stay on target gold leader
Your product launch is just the beginning of keeping your focus. Once you have brought your product to market and enjoyed some early success, it may become even harder to stay focused. Now you have customers calling you and recommending (or demanding!) features to be added and services to be provided. All of these distractions make it even harder to keep you and your team focused on a single goal.
Fortunately the process of keeping your resources focused post-launch is entirely the same. You need to pick your battles and allocate your resources toward the few initiatives that will be best served to do the one thing right that is truly driving your company. Serving the needs and whims of every customer sounds great, but it can also be a terrible detour when trying to keep the forward progress of your company moving.
If at any point during your journey you’re unsure whether or not you’re spending your time and resources effectively, just ask yourself one question, “Is this driving the core benefit of our product?”. If the answer is “yes”, you’re headed in the right direction.