Anyone who’s ever toyed with the notion of starting their own business and who’s gone so far as to seek expert advice has inevitably heard one resounding mantra: Perfect your business plan.
But in this article, “Everything you’ve heard about starting a business is wrong,” courtesy of SmartPlanet, two successful entrepreneurs argue against devoting significant time to upfront planning and to instead focus on interacting with members of your target market.
Their point is this: It doesn’t make much sense to formulate a plan for the ways in which your new business will operate until you know whether the product or service you’ll offer will appeal to enough customers to make your business viable in the first place.
The subjects in the SmartPlanet article state, “Don’t plan forever and build the perfect machine. Listen to customers, all good comes from that.”
Honestly, I believe that’s an overly simplistic approach to new-business planning. It’s as though the two entrepreneurs quoted in the article believe on-the-street market research and old-school business planning are mutually exclusive components of any business-launching strategy.
I agree that before you devote substantial time and energy to creating an official business-plan you need to know whether your idea will be perceived favorably by potential customers. That’s the most critical piece of knowledge for any aspiring entrepreneur to obtain before seriously pursuing a new business venture.
The article provides a brief profile of a San Francisco clothing company, Taylor Stitch, which, according to the company’s website, was started by three roommates who wanted to design and sell clothing.
Frustrated by their fruitless attempts to plan the logistical components of the future company’s operations, the three founders, “… got creative, measuring their friends in bars. They opened several pop-up shops around the city once they gained a little clout.”
The company now operates online and has a traditional brick-and-mortar storefront.
But the article says nothing about whether they used their market research to help develop a real business plan before they evolved from the guerrilla-style pop-up shop into what they’ve become.
If they didn’t formulate a business plan, my guess is it was because they didn’t need to seek outside capital to help fund their transformation. If that’s the case, good for them.
But in my opinion it’s silly to use their example as a case study for all future entrepreneurs, almost all of whom will need to pursue startup financing. That entails convincing investors—whether banks, angel investors, venture capitalists, or even faceless contributors via crowdsourcing sites such as Kickstarter—that your business has a clear path to profitability ahead of it.
I’m not arguing that pitching a product or service to members of your target market, and then using their feedback to hone your future offering, is less important than crafting a thorough, well-conceived business plan.
But to think that simply by conducting such research and then through clever guerrilla marketing your new business will be off and running, would be overly optimistic and, without a plan to fall back on, potentially fatally idealistic.