Your business plan is wrong...

Every business plan is wrong.  The moment an entrepreneur hits "save" or "print" the plan is out of date.  Things change.  In some cases you grow ahead of plan (like portfolio company Jingle Networks whose 1-800-FREE411 service has captured 3% of the US Diirectory Assistance market in one year) and are faced with the challenges of successfully scaling to satisfy user demand.  In other cases you find that some of your initial assumptions are no longer valid.  A competitor emerges.  New technologies emerge.  You are unable to build a team as fast as you had planned.  Distribution channel deals take longer than expected.  Customer adoption is different than what you expected.

Either way - it is critical for an entrepreneur to be able to listen to the market, their team and their customers and make changes to their plan as necessary.  I've always said that I'd much rather bet on an entrepreneur who can adapt to change rather than an entrepreneur who is convinced that they have the ability to predict the future.    But adapting to change is hard.  How do you maintain flexibility yet still preserve a goal oriented culture?  What do you say to investors who backed your initial plan?  When is a data point an outlier and when is it a warning bell?  Munjal Shah, CEO/Founder of Riya is doing a wonderful job blogging about his experiences in transforming Riya. 

(Disclosure:  Riya is a portfolio company of First Round Capital). 

 

Comments

[Mark S]

Excellent post. We just finished ours and I think the main benefits are thinking through shorter term goals, identifying potential problems, narrowing focus, etc. Alas, I believe they are mainly a waste of time, however - existing only to show to other intelligent people who will barely glance at them or, worse, to be picked apart by someone who doesn't realize they don't matter much...

[Vinit]

Well, might be another way to look at this is ... the current expectation's of a business plan do not match the design of the document.

Every business needs a plan, maybe a written document just doesn't cut it.

Anyone for a blogged biz. plan or BPlan wiki?!

[Business plan]

I absolutely agree with the post.

A business plan should never be complete, it should be consistently reviewed and updated to account for the inevitable developments in the relevant market, whether it be a new competitor or a new technological development shaking things up. Ideally, at the very least a business plan should be revised every three months so that priorities and main objectives are adjusted accordingly