On Jul 28, 2012, at 11:36 AM, Anthony wrote:
You mention a business plan loosely in your book, but did you ever put a plan together?
The first thing they mention in any "Starting your own business" class or if you talk to SCORE people at the SBA is, "Where is your business plan?, Gotta have one."
And in the FAQ of the Y Combinator site where AnyPic was getting help they ask...
Q: "Do we need to write a business plan?
YC A: Not for us. We make funding decisions based on our application form and personal interviews. We love demos, but we never read business plans."
Imagine that, they never read business plans, yet they have worked with over 400 business start ups! I think business plans are a huge waste of time, time that can be better spent elsewhere. You're already testing the market and refining your product, why do you need a complicated document with Executive Summaries and other business wienie hooha? Am I wrong to feel this way?
Anthony,
Only customers can validate feelings, but as to my opinion, I say this: I think in the book I make the point that the plan is an exercise in self- discipline... when you reduce your ideas to writing, contradictions and delusions jump out. Then you can address those. The business plan is for you, not anyone esle.
Parts of your plan, say your sales projections, can be shown to various players for their views. Let’s say for the start-up to be worthwhile to you, you must have $300,000 in sales your first year, given the profit margins, etc. So it is useful to share that with the sales reps to see if it passes the laugh test.
Along those lines, say the cost of goods is $100,000 in the same plan, sharing that with your supplier will allow them to guage whether they want to support your effort or not, and to what degree. In this way the business plan helps you test all of your asumptions in the process of the classic role of entrepreneur eliminating any risk.
Keep in mind the usual stated purpose of a business plan is to gain financing, which is never necessary to start-up a business. One does not need finance to start a business, one needs customers. To my mind the purpose of a businessplan is to figure out how to start -up without any financing. Any fool can spend money pretending to start up a business, but properly executed a business start-up makes money serving others without needing financing, or anything beyond self-financing.
When banks arranged to be protected by the state, and were allowed to create credit out of thin air, necessarily they needed customers to borrow this credit. The banks desired to lend the credit and upon which to charge usury. This scenario is inherently unstable, and risky for the banks and the borrowers. As to the banks, the state promised to bail them out no matter what. So all risk was transferred to the borrower, and if they failed, the taxpayer. Therefore, with the introduction of state protection of fiat credit and usury, our economic system became ever more risky. To lend this credit, the banks introduced the idea of business start up as “risky” when never before in history was “risk” in the mind of the merchant. Risk as an element of business start-up is the result of social conditioning over the last century or so.
If we were to get the state out of banking, and completely unregulate the field, our economy would improve immensely. Right now we suffer as the state creates trillion in credit which it gives to the bank who deposit it risk free at .25 points at the USTreasury, slowly recapitalizing the banks at taxpayers expense. This would end with unregulating the banks and free market banking would emerge.
Also, there is no point in having SCORE or any other government program relating to business, small or otherwise. It should be disbanded, the budget cut and taxes reduced, and the social security number of every person associated with SBA and SCORE noted so they may never find work or funding in Government again. If they are so good at business, we need them badly starting up businesses and paying down the national debt through taxes.
I once went up against State of Washington "free" export consulting service (the consultant being paid $120k per year by taxpayers, not to mention his staff and office, etc) advising a grower on building export markets. I charged the grower $10,000 for my services. First I asked how come he was paying me when he could get "free" consulting from the state. The farmer said I made sense while the state consultant seemed clueless. In time, the state consultant provided nothing, while I worked through the process of landing paying customers. The state consultant was promoted in time, and no doubt is still working for the state, or enjoying a posh retirement fund. End it.
So, whereas in some respects parts of the plan are for sharing with others, the business plan is for yourself. I always write down a business plan, and have one for STC, which I am constantly changing...
John
Feel free to forward this by email to three of your friends.
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