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Episode 16 – Why what you need is not a business plan

The Two Extremes

In the world of entrepreneurship there is a very real belief that when you are starting an online business – you should either take the leap and learn to fly on the way down…

OR have a solid and detailed business plan and not do anything until you have that fully mapped out.

Talk about two extremes!

I believe the truth is a little different.

Traditional Businesses Should Have Traditional Business Plans

If you are starting a brick and mortar style business with a premises or staff from the get go then yes, I would recommend creating a business plan so that you have a good understanding of the financials and what it’s going to take to make the business work. You’ll also need a business plan if you want to raise funds.

Here on your business, your rules, we’re unlikely to be looking to do either of those things.

You’re looking for location-independence, which means no set location and you’re building a streamlined business where at least for the first couple of years you wouldn’t have staff.

Freelancers hired as needed yes, staff no.

While we’re not traditional, we’re still complex

Your costs are minimal and your business in the beginning just costs you some of your time.

That said while you don’t need to worry about paying for staff, office rent etc the online world is complex and competitive.

Because it’s so complex and competitive if you are starting an online service-based like a coaching or consultancy business it’s actually close to impossible to
know for sure what is going to land with your potential market until you try it.

You can’t plan to sell x number of your premium packages within the next year because you just don’t know yet if anyone wants that.

Also it’s not like you have foot traffic. In the beginning it will be slow but it is possible to build quite quickly so your growth won’t be linear.

So a traditional business plan is literally no use to you, other than it being a tool to organize your thoughts

You actually don’t need a traditional business plan. (And they might not either)

A framework to follow, yes, and that’s what I use, but a business plan – no.

Simply put, you can’t plan what will happen with your business before you’ve started it. You are literally just making it up.

Even in more traditional businesses the efficacy of creating a business plan up front, which has been the standard approach for decades, is in question.

William Bygrave, an entrepreneurship researcher, studied several years’ worth of Babson graduates to find out how much better those who started businesses with a formal business plan did than those who didn’t. The result? “We can’t find any difference.”

There were some advantages to writing a business plan, but the key piece he says here:

“We’re saying that writing a business plan ahead of time, before you open your doors for business, does not appear to help the performance of the business subsequently.”

All of this can be summed up by the quote “No battle plan survives contact with the enemy”

i.e. you just don’t know what will happen until you try and then by definition you’ll need to change your plan.

So if a traditional business plan won’t help you – what do you need?

You need a solid concept to test

An idea concept – in the past I’ve referred to this as your business foundation.

  • A niche
  • The messaging around the niche (why you are different)
  • Some offers

A solid concept to test. And you take it to market. Without investing a ton of money and find out if it works.

If it doesn’t you make adjustments until it does.

This is what I do with my clients which is what enables us to get results so quickly. Instead of deciding on a business idea and then spending months building a website, printing business cards etc only to find out it didn’t quit land we create a concept to test first by finding a few people who would like to try it out.

This test concept can work first time. Often it needs adjustment, either the angle we are taking (that’s the messaging) needs adjustment or the offer needs to be changed or maybe it might need a slightly different audience. Either way we adjust until we get it right.

Only once we know it is working do we invest in time and or money building a website and getting all the business assets in place.

No business plan can tell you that upfront

It’s a best guess. And I believe guesses should be tested before going all in. Especially when this is about your livelihood.

It takes actual contact with your market to find out if your idea has legs. And you do that by creating a solid concept to test.

If you’d like more right now check out my report How To Create A Steady Stream of Clients For Your New (Or Not So New) Online Business. You can get that at no email address necessary.