Eff Around & Find Out - 11.17.22

Business plans are hurting your fundraising efforts + unstucking your work

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STARTUP. Business plans can suck it

VIDEO. If you’re stuck on something

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STARTUP. Business plans can suck it

When a potential client or investor asks: 

Show me your business plan.

A part of me dies, inside. 

I don’t blame them for this ask. It’s been ingrained in us that we need to put together a “business plan” when presenting a company to invest in, or a product or service to buy.

It makes the prospect feel safer. It shows we’ve “done our homework” and thought things through. 

There’s a passage from the book ReWork by Jason Fried and David Heinemeier Hansson (of Basecamp fame), that has changed my perspective on this, and helped me in my work. 

Writing a plan makes you feel in control of things you can’t actually control. 

Why don’t we just call plans what they really are: guesses. Start referring to your business plans as business guesses, your financial plans as financial guesses, and your strategic plans as strategic guesses. Now you can stop worrying about them as much. They just aren’t worth the stress.

When you turn guesses into plans, you enter a danger zone. Plans let the past drive the future. They put blinders on you. “This is where we’re going because, well, that’s where we said we were going.” And that’s the problem: Plans are consistent with improvisation.

And you have to be able to improvise. You have to be able to pick up opportunities that come along. Sometimes you need to say, “We’re going in a new direction because that’s what makes sense today.” 

The timing of long-range plans is screwed up too. You have the most important information when you’re doing something, not before you’ve done it. Yet when do you write a plan? Usually it’s before you’ve even begun. That’s the worst time to make a big decision.

Figure out the next most important thing and do that. Make decisions right before you do something, not far in advance. 

That’s when we have the best, most important, and most relevant data on this side of outcome, anyway. 

It’s okay to wing it. Just get on the plane and go. You can pick up a nicer shirt, shaving cream, and a toothbrush once you get there.

Most decision consequences aren’t permanent anyway, and I believe the results of winging it and planning it are the same.

In fact, your ability to be flexible and aware of the circumstances are more important.

Working without a plan may seem scary. But blindly following a plan that has no relationship with reality is even scarier. 

I’m helping a successful entrepreneur raise a fund to build an exciting new restaurant concept; and when a group of investors had asked for the business plan, I was excited to take this mindset and test it. 

I responded:

“We don’t have a business plan. What I’ve learned from doing this for two decades is that calling them ‘plans’ is wrong itself.

Plans always look good, falsely make you think nothing can go wrong, and are dangerous. 

We can share some ‘business guesses’ if you’d like. We can share track record from our past; show that nothing ever goes according to ‘plan’ and focus more on how we’ve been able to respond, private, adapt, and thrive like most great companies.”

Bam. We’ve got the deal.

And in fact, they also asked for a Right of First Refusal to invest in future stores, too. 

Why it worked?

You’re getting investors off of depending too much on the business plan.

If they’re just guesses, they’ll spend less time on that, and more time on the leadership (any savvy investor knows they’re not betting on the company, but the team), the business model, the future potential, and the relationship at hand. 

It was very cool to see the lightbulb light up above their heads.

I live for that, I swear. 

This doesn’t always work - especially if you’re working with a bank; an investor with deeply-entrenched parameters; or, if you’re raising capital with not a lot of experience and track record behind you.

BUT, I still recommend that you at least rename the business plan as a “Business Guesses” document, and preface it with the above talking points. 

At the very least, it will pull them out of default/robot mode, have them curious to check out WTH you’re talking about, and show that you’re clearly different from other opportunities.

You’ll exhibit independent, fresh thinking. And you’ll come off as more realistic and honest in your pitch. 

Here’s to guessing your way into important work. 

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VIDEO. In case you’re stuck on work

I hope this clips pulls you out of whatever rut you might be in.

I’d appreciate any comments and a subscribe as well, if the spirit moves you!

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