In their fine book, Heart, Smarts, Guts, and Luck, these three collaborators open up the discussion by saying that entrepreneurs too often overthink their business at the beginning. True to B-School form, they create a detailed business plan that is “precisely incorrect.”
There is a time at the beginning when you have to see if your wonderful idea for changing the world has legs. That is, does anyone else want their world changed? Spending too much time in analysis before you actually try your idea out with customers can not only waste time, but lead you down the wrong path.
Put your concept for a product or service down in tangible form and share it. Get feedback. A business plan can’t do that for you.
Read “Heart, Smarts, Guts and Luck” by Tjan, Harrington and Hsieh
BloggingGazelle is published daily by Shawn Carson
Dan Marcum of Relevance Capital says there are three types of business plans; one that is 3 pages long, one that is 30 and one that is 300.
This outlines the stages of involvement in the investment relationship. The 3 page executive summary is your company’s resume. It’s long enough to generate interest and hopefully a request for a meeting. The 30 pager is the typical business plan that provides the details about your market, financials, development and the team. And the 300 page plan is the due diligence checklist you will be given when an investor gives you a term sheet.
The 3 pager is much stronger after the 300 pager is done, BUT!!!! you can’t stop everything and focus solely on the writing a detailed business plan because the moment you finish, it is out of date.
- Keep your Business Model Canvas Current. You should be able to whip out a 3 page Executive Summary when you need it but update it as you go.
- As you iterate the Business Model Canvas, keep a digital folder of every website article, market research report, financial analysis, customer interview, legal document and bank statement. This provides the meat you’ll need to write the 30 pager. Keep it updated every three months or so unless you get a meeting, then tweak it one last time.
- The 300 pager can probably wait until asked for. Each investor has their own and it may be long or short and they will give you a checklist. If you have kept your digital file organized, you will be able to quickly put together all the documents they ask you for.