Marc Andreessen has another post up in his great series about startups. He basically says that business plans do not matter that much because the product and market are by definition undefined. He goes on to quote the U.S. military "No battle plan ever survives contact with the enemy" to support his view.
I prefer this quote from Dwight Eisenhower, who knew a bit about the military, planning and success. Eisenhower said "plans are useless, but planning is indispensable". My thoughts on business plans are here.
Marc is ahead of me in building billion dollar companies 2 to 1, but some of the lessons I learned are:
- Planning is essential to success because it brings a discipline to your thinking about the business; I never wrote more than a 2-3 page plan each year but it focused on the key objectives
- Stay close to your customer whether it is through market research, visits or focus groups; the easiest sale is to increase revenue from an existing customer
- Always be looking for ways to grow the business regardless of economic conditions; great companies become more aggressive in downturns
- Always raise capital well in advance of your need; capital market conditions can change rapidly and the cost of lost opportunity is much greater than the carry cost on excess cash
I think that the mistake many startups make is inadequate attention to the customer, understanding them and being able to define them in clear terms. Too many companies define their customers in census terms and never get a more profound understanding. If you focus on the customer, product or service definition becomes much easier and you may reduce the uncertainty of your startup.
