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The death of the business plan

Posted by Al Doan under Gaining Experience, Reactions to Mentors, techstars

15

May
Hard Knock MBA (Personal MBA)

I know it’s been killed before, but being a recent product of my undergraduate program, I still had a fondness for the pain and drama that business plans brought to my life. The scenario would play out like this –

Kid with great idea: “Hello mentor sir/madam, how are you, I have a great idea… what do you think?”
Mentor who hears a ton of ideas and needs a filter: “Whelp, put together a business plan and we’ll talk, mmm kay?”
Kid with great idea: “Well okay…”

Page 17 of the business plan the enthusiasm is overwhelmed by the utter confusion and disappointment of trying to pull together a business plan that has to be shnazzy yet professional, functional yet fun. A business plan done ‘the right way’ is the holy grail, there’s no way it can be done. Someone always tells you it’s done wrong. This task turns into a huge obstacle for new ideas and I’ve often seen the ideas scrapped completely following the feelings of frustration the process gives. It’s just not healthy.

Enter the business plan killer … Four One Page Briefs!

Ohnoes! you’re all crying. But calm down and let’s talk about this.
Leading out in TechStars, Cohen (inspired by the book “The Four Steps to the Epiphany”) asked each company “who is on the Product Development Team and who is on the Customer Development Team?” (keep in mind he’s talking to companies with 2-3 people). He said that between 2 partners you should have one representing the product, one the customer. He then followed this by giving an assignment to each company with their respective ‘teams’ – Four one pager briefs due in a week –

1. Product Development Brief
2. Customer Brief
3. Pricing / Distribution Brief
4. Market / Competitive Brief

The idea is that they build one page working documents in each of those areas, just from what they understand about their company/industry and the research they’ve done. They will then take these working documents into meeting with mentors where they can run down each page in bullet fashion, getting feedback and critique. They are made to be marked up, red lined all to heck, then redone following each conversation. After 5-6 mentors they should have it tightened up and the result is four very concise documents that speak exactly to the issues and advantages in their company.
Let me breakdown each of the briefs quickly just to give you some direction on where to go with them, then I’ll leave you to your own devices.

  1. Product Development Brief
    1. This is your hypothesis created by the Product Dev Team
    2. Think along the lines of features, benefits, dependencies (does another companies product have to be in play for your product to succeed), product milestones, etc.
  2. Customer Brief
    1. This is your hypothesis created by the Customer Team
    2. Think along the lines of type of customers (decision makers, economic buyers, users, saboteurs, etc), problems they have, a day in the life of your customer (summary of findings for each customer type), influencers, ROI, etc.
  3. Pricing / Distribution Brief
    1. This is your hypothesis created by the Product Dev Team
    2. Think about product cost / pricing, distribution channels, demand generation, etc.
  4. Market / Competitive Brief
    1. This is your hypothesis created by the Customer Dev Team
    2. Think market type (entering existing market, resegmenting a market, creating a new market (not likely))
      1. If existing – who’s the market leader, what is the market share you go for, how do you differentiate, are you bucking standards or embracing them, where do you fall in the cost benefit of competitors?
      2. If resegmenting – what’s your segment and how’s it different, what needs are unmet in existing market that will cause them to abandon what they have, who aren’t people already doing this, how do you educate your market?

If new – what markets will your customers come from, what’s the need that will compel them to jump, how do you educate the new market, how do you create demand, why not resegment an existing market?

The conversation now changes from an obstacle that is thrown at the entrepreneur that discourages and frustrates to a few simple drafts that give a starting point and elicit understanding from the entrepreneur. In the end, a collaborative document that represents the whole team is a refreshing change from the mediocrity that is a majority of business plans.

It’s in the mentor’s best interest as well, you don’t care about their business plan, and you just want to see that they’ve done it, but when it’s done what do you do with it? This is called progress people, embrace it.

So please never write a business plan again. Show me your four one pagers and let’s get down to business.

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Hard Knock MBA (Personal MBA)
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