Years ago my wife was very excited about starting up a new business to do event décor for parties. She worked out the numbers and projected she could make about $1500-3000 a weekend after labor and cleaning. She talked with me and we decided to go out and buy some event décor stuff and get her going. She did a few parties for friends to build a portfolio, see what people wanted and estimated how long it took to decorate the parties. It was a bit of work, but it looked pretty profitable. So as loving husband I gave her the advice that all of my friends and family have given me when I wanted to start a new business, and told her to write a business plan so she can be more strategic in her sales. Writing the business plan completely killed her business.
What do you mean it killed her business?
Exactly that. She had an incredible passion for it, she went out and took action to go find the materials, buy the products, did a few demos, got some clients, made a few bucks and she HAD a business, it was running, but once she had to sit down on the computer to project her 5 year plan, that was it, it was dead as a door-nail. This isn’t because my wife is afraid of business, technology or writing. My wife is a medical scientist and is a super nerd, she literally goes to staples once a week to browse pencils and stationary. She loves to be organized. This should be her jam, but once she had to project a future, and make numbers to support it, create a market analysis report and projections of her supplies, it became overwhelming. She asked me “Why do I have to do this? These numbers seem fictitious.” And I replied “So you know where to put your effort, create a plan. 90% planning with 10% action will get you to your goal”. This is the sage advice I had been given for every failed business I ran too. Wait what?
I have run 4 successful businesses over the past nearly 20 years, one lasting 17 years, but I have started 6-8 unsuccessful ones too. Every single one that was a success I “fell into” and went with my gut. Every business idea that failed was when I wanted to “take it seriously” or “create a strategic plan”. Ie, I wrote a business plan.
So why does a business plan kill your business?
I think there are a few reasons it can kill your business.
- It kills the fun — The biggest one is that you are making a plan for something that you haven’t even tried yet. You don’t know how the market will ACTUALLY react to your product or service. You are literally just doing mental masturbation by playing with the numbers and not putting any work into this idea.
- It kills the passion — You are passionate about your business and you want to throw a wet blanket on it by pretending to do business on paper? You are literally wasting your time, and you know it! Your conscience is telling you “STOP! STOP! Why are you doing this to me! I want to DO MY BUSINESS! “
- It promotes the idea that you aren’t ‘smart enough’ – Comprehensive business plans (5-10 year plans) are very detailed, and can be overwhelming. Mostly they make you “figure out” things that you don’t have the experience to ask or know when you are starting a new business. You can be an accomplished business person, but going into a new sector makes you a n00b again. What happens is you start eliminating or N/A’ing out sections, but this makes you feel like you don’t know what you are doing, because you don’t have the information. The thing is, you DON”T NEED THAT INFORMATION YET.
- It promotes getting a loan — Are you writing this to be professional or to get a loan? Many people write a business plan to be professional, but what does this mean? Usually you are looking for validation, and validation comes in the form of a loan to many people. Imagine this scene in a movie, a guy brings his shiny new business plan to the bank and has the loan officer look over it in their marble office and say “mm, that’s interesting, wow sir you really have a great plan here, here is a bucket of money.” They shake hands and now he owns Google. That shit is a myth. Honestly that is the message bankers want you to hear, so they can lend you that money that will likely fail, so they can get their interest from you. You don’t need a lot of money to start your business.
- It promotes the idea you need ‘permission’ – Item 3 & 4 go together, because it gives this idea that someone else knows your business better than you do, so you are asking permission to start from someone “smarter”, “who knows the business” or an employee of a bank who has never actually run a business to give their blessing to YOUR IDEA. YOU DO NOT NEED THEIR PERMISSION, YOU SEE THE NEED, SO GO FILL IT!
- It wastes time – You do NOT need a business plan right now, you need to be trying to sell that shit as quickly as possible with the lowest investment possible.
- It will fails before you start – This plan you made in 40-60 hours is a fantasy. You are literally are making shit up. You will feel bad if you do not meet your goals that you set for yourself, because you haven’t even tried yet. Don’t do this to yourself.
OK, NO PLAN, GOT IT, JUST HAVE ACTION. RIGHT?
So the truth is you do need a basic plan. When people think a business plan they think of these comprehensive plans, you need a micro plan. It is literally the things you know.
YOUR PLAN CONSISTS OF JUST THREE THINGS:
- How much does it cost me?
- How much can I sell it for?
- Where do I sell it?
This is all you need. Period. Later you can fine tune it, but this is what we call the MVP plan. The minimum viable product plan. You should be able to do this in your head.
Example: I am selling a book that I bought for $1 for $5 to a bookstore. I made $4. That is a business. Now you just need to figure out how many books to sell to that bookstore so you can make your $100lk a year, right? That is the fine tuning. But it all starts with the first sale! Go sell that book anywhere you can today! If no one will buy your book, then try again tomorrow. By day 3 if no one is buying your book, then get a new book and try that or try lowering your price. That is the fine tuning. It took 1 day to give you more information than all that time pretending to have a business. When you make a sale, you legitimized your business. You are a business person. It works. That is incredibly valuable.
Pro tip – Use spare money to try your plan, I’m talking about like $10 or $100, whatever you think is play money, use that. You can make money from any amount of money. Then set a deadline to sell. I will sell $10 of product in 2 days for $15. That is 50% profit!
Sounds too simple right? Because business is simple. You have something that someone else wants, don’t over complicate this. Is it easy? It may not be easy, you are going to have to break down a lot of mental barriers to get that first sale, but that is why it is the hardest and best feeling when you accomplish it.
I have created a quick tool for you to help you get started, it is a 7 day Quick Setup Guide. It will walk you through some basic questions and help motivate you to get going on your project.
Now go out there and make it happen. You are one step closer to learning to be free.