If you’ve ever watched Dragon’s Den, youll be familiar with the sweaty-palm moment when the entrepreneur whose livelihood is on the line is asked an awkward question that they can’t answer.
They mop a bead of sweat from their head. Their hand shakes and their knees quiver. A moment passes and then their voice trembles as they tell the dragons Im sorry, I don’t know.
The dragons are up in arms. They scoff, sink back into their chairs and laugh at the foolish wannabe who can’t remember an insignificant detail from their business plan.
Their dreams in tatters, they retreat into the pretend-lift and sigh as an unseen stagehand closes the door on their future. A tear glistens in their eye as the door behind them opens and Evan Davis gives them an awkward hug.
if only youd remembered that insignificant detail from that document youll never ever need again, he tells them.
Every entrepreneur who starts a new business has the awkward moment when they feel like they really should have a business plan. People on TV spout on about them and there are whole books dedicated to making an amazing business plan for your startup, but in reality, they’re pretty pointless and you certainly don’t need to memorise everything in it. Google, Microsoft, Uber and Facebook were all started without business plans, so why should you need one?
I started my company, Distract in 2015. We now have 13 members of staff and were growing rapidly. Were working with some big companies and in the last year our turnover doubled. Earlier this year, I started another company, Featured which is our own take on Dragon’s Den where we invite new entrepreneurs to pitch their business ideas to us and, if theyve got what it takes, we invest in them and help them scale up.
Never once have I actually needed a business plan of my own and Im not fussed about whether any of the businesses I want to invest in have one either.
Mike Tyson once said Everyone has a plan until they get punched in the mouth, and he’s right. When all you can do is move numbers around a spreadsheet, you can’t predict the future of your business because the reality of trading is completely unpredictable. A business plan is a work of fiction and you’re wasting your time making one.
a business plan is a work of fiction and you’re wasting your time making one.
Worse, if you trust them too much, business plans can just as easily lead your company into hot water. If your profits don’t perfectly align with the forecasts you slaved over before you dipped a toe in the market, youll probably panic and do something stupid.
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Alternatively, you might end up sticking too rigidly to your plan and end up spending all of the imaginary money you thought you could rely on. If you’re doggedly sticking to a plan, youll also end up missing all the opportunities to make your business more successful because those opportunities werent part of the plan.
Youd be much better off to just keep an eye on your ingoings and outgoings, respond to any trends, and look out for changes and opportunities. Instead of sticking to a plan, you should be open to taking your business in new directions you wouldnt have thought of before you started. it’s not rocket science, just use your judgement.