It won’t be long before young entrepreneurs skip the business plan altogether. Personally, I’d rather be sent a demo URL or a prototype than a 50-page business plan I don’t have time to read. Showing me what you’ve done beats telling me what you’re gonna do by a country mile. If you’ve got it, flaunt it. If not, come back when you do.
Sure, you will probably need a business plan to get some early funding. But the real value of your plan depends entirely on how you develop and use it. It can be a roadmap or a roadblock. At any moment in time, your business plan reflects your best educated guess at the future. And it’s going to change a million times as you progress, because that’s what building a business is really all about - it’s about evolving and advancing a central idea through continually changing circumstances.
You should use a business plan as a tool and a starting point to recognize and measure changes, so that you can react to them and adjust. It’s not an operating manual to run your business. Trying to stick to a plan that was written in the past assumes that you’ve learned nothing since the time it was written, or from the unforeseen events you’ve encountered. In fact, in times of rapid change, your past experience may be your worst enemy.
Think about what would have happened to Encyclopedia Britannica if it had followed its original business plan, or allowed itself to become too tied to its history. In March, Encyclopedia Britannica announced that after 244 years (but only 11 years after the founding of Wikipedia), it was discontinuing the publication of its print edition. At its peak, Encyclopedia Britannica sold 120,000 hardcover sets of its books. By the time the company abandoned print, those editions accounted for less than 1% of the company’s revenue.
Meanwhile, about 500,000 households were paying annual fees for online subscriptions, representing about 15% of the company’s revenue. The lion’s share of sales came from curriculum products. The company had responded to aggressive new competition and low-cost delivery systems by changing their entire business in less than a decade. They became a new, agile player in the information marketplace.
Too many businesses run into serious problems because they waste time trying to make their circumstances fit their plan rather than changing their plan to fit their circumstances. The longer you benchmark or measure your progress to an irrelevant or outdated standard, the more time you waste and the more ground you give up to the competition.
A model or plan doesn’t necessarily get you to the truth. Eventually the “math” stalls out and something more human and personal takes over. Great entrepreneurs are pioneers. They embrace change so quickly that their decisions will never be totally justifiable by the numbers.
Remember: “You get what you work for, not what you wish for.”
HOWARD A. TULLMAN is the General Managing Partner of G2T3V, LLC – Investors in Disruptive Innovators and of Chicago High Tech Investors. He is the former Chairman and CEO of Tribeca Flashpoint Media Arts Academy. Over the last 40 years, he has founded more than a dozen high-tech companies. @tullman