July 5, 2020

Why Startups should NOT write a Business Plan

a relatively common question we get revolves around business plans but a matter of our customers asks us if we can write a business plan for them and we always respectfully decline I believe a startup should not write a business plan it's a terrible waste of time for the

founders in the early stages of the company when they should be focusing on validating their business premises in this video we're going to look into why the business plan is an outdated way to approach starting a business and how new frameworks like the Lean Startup are a much

more effective way to build companies all right so here's the textbook definition of a business plan a document setting out a business's future objectives and strategies for achieving them if you look at most business plan templates available online you're often looking at a twenty to forty page document

that touches on the opportunity the problem the market size execution sales plan the company the team the financial plan well guess what a pitch stick touches on every single one of those topics the difference between a pitches are gonna business plan is that a pitch tech can take

a few hours to write less than an hour if you use that really awesome tool we've mentioned before in contrast a business button will take you days and days of writing and proofreading an angel investor or a venture capitalist evaluating a starter for a seed round is not

gonna sit down and read a 40 page document they want to know that you are on the right track they want to confirm that you have a plan to grow the business but that doesn't need to be a 20-page document any starting business is built on assumptions on

the assumption that this product or service is going to appeal to these users the assumption that these marketing tactics are going to be effective in converting them all of these assumptions might be wrong and it's the ceo's job to test these assumptions fast and if the premise is

incorrect pivot the company in the right direction as fast as possible in the end starting a company is a race against time how many iterations of your product your audience your marketing / sales strategy can you go through before you run out of time for a startup time

equals funding / money if you had to spend two weeks putting together these assumptions on paper proofreading them and styling that business plan you literally wasted two weeks of precious time you could have run to audience experiments in the same time and find out right away instead of

just planning to find out that's my problem with business plans in a nutshell they take too long to write you should spend the time validating instead of planning now this mentality actually comes from a framework most startups these days abide by laid out by Eric Gries on the

Lean Startup it's a fantastic book I think any entrepreneur should read and we'll be giving away a few copies at the end of these video so stay tuned on how to get them the methodology that the book proposes is the build measure learn cycle first you build an

iteration of your product that may be an MVP a website and a version of your app or service then you measure you observe you throw this iteration to the world and measure its success that may be conversion rate sales click-through rate you need to understand if your premise

is correct and if it has a measurable measurable impact on your company's performance finally you learn you study these results understand if they were positive or negative and create a new premise based on these conclusions once you're done with this analysis you go back to building again every

key aspect of our company was built this way when we were starting the company we first launched a simple landing page to figure out if people would be interested in this pitch tech a I design product we measured conversion rate compared it to our expectations and then we

built the next iteration which became more first beta every single marketing campaign we do is a Lean Startup product in itself we come up with a new campaign build it as fast as we can measure the results and learn to be able to improve it and build again

the last bigger iteration in our business was our pitch the consulting service we had a theory that many of the stars that were using our product or cell service product to create pitch decks would benefit from a real human assistant but we didn't know if this was right

instead of running market stories or making a new business plan we built a quick landing page then threw some traffic in there and measured results when I say build a landing page this was a project done in few hours the first few leaves were landing directly on my

cell phone and I used to handle both the sales decoding the writing and the design stuff for all these projects this is as lean as you can get but you can get answers really really fast only when we learned that this business made sense that the economics worked

and that we could scale it we went back to building a new iteration with a much more elegant page sales and nurturing process we had the answer to this question in less time than it would have taken us to write a business plan and that is exactly the

moral of this whole story we've also built countless Lean Startup experiments that have failed by the way but that's the point we measure fast learn that we were wrong and carry on pitch deck versus business plan a pitch stick is the Lean Startup version of a business plan

to write a compelling pitch deck you also need to have figured out your total addressable market and your go-to-market strategy the difference is the pitch stick fulfills the purpose of pitching this to an investor without requiring the extended version more importantly the reality for any company is that

they are gonna be wrong about their assumptions in the early stages their pricing might change or therefore page sales plan might not work at all so they need to be able to change course as fast as possible on your pitch stick you should be passionate about your expansion

strategy or go to market you should believe in it and your metrics should prove whether it's working or not still everybody in the room knows your success will depend on your ability to come up with a new strategy and deploy it faster than your competitors another pair of

fantastic tools that I think can help you replace the need for a business plan is running a business model canvas and allene validation board both of them can figure out the answers to these questions and we have templates for both of them in our platform so in summary

let's make sure that you can answer these key questions about your business don't write it on a business or not just have the answer to yourself how big can the company be is this a million dollar business a 10 million dollar business or a hundred million dollar business

how fast can you get there is that gonna happen in five years or in 50 years if you're a b2c or business a consumer company who is your perfect customer how where do they live what absolutely have on their phone what do they do for fun you need

to understand your customer to its core if you're a b2b business or business-to-business who's your perfect client how big is this company who in the company do you need to get in touch with who in the company makes the call to buy your product how much money do

you make for customer and therefore how much can you afford to spend to acquire each view customer most of the companies we work with are missing one of these questions which makes it really hard to define the type of investor that they need to look for if you

can answer them then summarizing them into a slide is really a no-brainer especially if you have this physical sliding platform that takes care of the design aside from the sliding platform the next best tool I can give you is this big red button on the button right corner

of this video hit that subscribe and stay tuned for our content around starting a business finally on that book giveaway the first 10 companies to sign up for a sly bean plan will get a free copy of the Lean Startup from Amazon either via audible or you know

on the traditional paper book see you next week [Music]

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