Flexible Business Design

Alastair Dryburgh wrote a price in last month's Management Today, 'Eight ways to design a better start-up’. The notion of business design (i.e. how you shape your venture) is an overlooked consideration for start-ups and he makes some good points about planning:

 

“Be wary of planning. This may sound heretical, but don't have a detailed business plan. Plans are dangerous because you can become wedded to them, even if it is soon clear they won't work.”

Alistair’s principles can be useful but effective design is less about fixed blueprints and more about creating the right attitude as the foundation for business success. Design the shape and culture of your business, yes; but don’t spend too much time creating a beautiful theoretical model that will never work in the real world. Being liberated from a plan means you have the flexibility to prototype your ideas in the market and then reinvent your offering accordingly. For me, business design is not about getting your model right first and sticking to it. It’s about getting your mindset right but staying agile and flexible to adapt as you go.

And the October issue of Management Today just published a letter from me saying just that (click on the above image to view).

The 'Light' Business Plan: by Nina Kaufman

Nina Kaufman is an award-winning New York City attorney, edutainer and author. She has just written a piece 'The Light Business Plan' that appears on WomenEntreprenuer.com and FoxBusiness.com. I have pasted the article below (article copyright remains Nina Kaufman).

I was all set to write a column on business planning, employing Gen. Dwight D. Eisenhower's overused quote, "If you fail to plan, you plan to fail." But then I read Ian Sanders and David Sloly's booklet,"Unplan Your Business," which gave me a very different perspective.

While Eisenhower wasn't wrong, businesses has changed radically over the past five years . . . so the standards of business planning that many of us grew up with may no longer apply. In particular, the days of the detailed three-, five- and 10-year plan may well have gone the way of the Betamax. With the rapid pace of change, who can predict how things will look in one year, much less five? And the newly self-employed (a.k.a. the recently unemployed) may not have the luxury of time to engage in business plan navel-gazing.

Sanders and Sloly don't advocate no planning--they simply raise the valid point that too much planning, evaluating and cogitating can lead to what's known as "analysis paralysis." They suggest that many entrepreneurs--especially those in service-based businesses that are not capital-intensive--will go further with plans that "are short, sweet, and clear; plans that inspire, excite and motivate you to fill them." Why? Because ultimately, your business will go nowhere with just a plan. You have to take action to implement the plan. And if you have filled the plan with too many impossible details, one of two things will happen:

1. 1) You will lose the passion to bring that plan to fruition.
2. 2) Or, you will lose the flexibility you need to respond to market conditions.
3. 
   

Ask most successful business owners, and they will tell you that "carefully plotted linear routes" (Sanders' and Sloly's phrase) are not the way they achieved success.

So if an agonizingly detailed business plan isn't necessary, what is?

Your business plan needs to outline two objectives:

1. 1) How you will achieve growth
2. 2) How you will manage your risks
3. 
   

Growth is the easy and fun part. That's describing your ideal target market, how you will attract them and what makes your product or service unique.

Risk management is the not-so-fun part. It's the part that acknowledges that you do not have unlimited financial resources to bail you out of trouble (or avoid bankruptcy). How will you bootstrap your business with the resources you have? The key is not to run out of money before your business has had an opportunity to become profitable. You'll want to make a note of:

• - Startup expenses. What are your initial (and, usually, one-time) costs for business filings, equipment, website launch and related marketing, and professional fees? 
   
• - Fixed expenses. What bills will come in every month, regardless of how much business you're doing? For example: cell phone bills, rent, insurance, internet access, other hosting or online membership fees.BestSmallBizHelp.com has a good video that explains this if you're a little fuzzy on the topic. 
   
• - Variable expenses. Do you have any expenses that change depending on the quantity of business? For example: additional independent contractor expenses to staff an unusually large project, or inventory, packaging and shipping of product orders.
• 
  

Gathering this financial data isn't exactly sexy--but then, neither is going bankrupt. What is sexy is power. That's the power that comes from knowing your true financial situation. And with that knowledge, you can manage your legal risks. Those are the risks that come from not paying each vendor, employee, and credit institution you use for your business in a timely manner.

So sure, let loose and "unplan" . . . but be a little tight when it comes to your numbers. In the end, your business needs to generate enough money for you to live on. And you can't know whether you're meeting the mark if you don't measure it.

Unplanning The Moo.com Community

Ever since I discovered Moo.com a couple of years ago, I've been a huge fan and have bunches of their business cards, stickers and postcards to prove it. Before Moo came along I’d spend up to £250 getting business cards designed and printed. Now you can get cards done for under £25 and even choose different backs for each of your cards. What a game-changer!

And that’s been their success, such a cost effective solution that customers can change business cards whenever they fancy refreshing their marketing. As well as traditional business cards, I’ve used cards to promote my books, created personalised postcards for clients and have had stickers made to promote my books, plug my session at South By South West and even had stickers featuring my kids to put on thank you cards.
Moo have assembled a great community of like minded folk: the ‘I have an idea’ generation, start-ups, freelancers, small businesses, those with hobby businesses - so it’s a great fit with the spirit of Unplan Your Business. I’ve just written a short column on business unplanning for Moo's 'Expert Tips' pages: CHECK IT OUT HERE

If the risk is low, press ‘go’.

So a friend told me about this entrepreneur. He’s planning on setting up a retail business. The idea’s been over a year in gestation. He’s spent 12 months trying to secure his ideal premises, he’s been thinking about price promotions to offer, he’s even got staff t-shirts branded and ready to go. He’s played around with different financial models on spreadsheets.

Great. His idea has gone off the laptop and into the real world.

But the problem? He’s not actually done anything with the business yet - he hasn’t made it happen. Rather than get t-shirts done and spend months searching for premises wouldn’t it be more effective to launch and test his idea? Take a market stall somewhere to test his products. Talk to a landlord of an empty shop about having a ‘pop-up’ shop for a month trial, even trading online to crowd source and test demand. He could kick-off the business like that in a flash. Getting t-shirts made for his non-existent staff is the least of his worries! If the risk is low, he just needs to press ‘go’.

(Yep, he just needs to #unplan it)

Unplan Your Business in Management Today

I've just written a column for Management Today's Expert section on 'unplanning your business' - introducing innovation into your business thinking.

You can read it HERE.

Business Planning Vs. Business Doing

Here's a post I've just done for Virgin Media Pioneers. What's your focus this week: business planning or business doing?

David Heinemeier Hansson: Follow Your Instinct

I recently had a conversation on email with REWORK co-author and 37signals partner David Heinemeier Hansson. That will be the subject of one of my columns for BNET.com later this month, but in the meantime here's an extra in the shape of a question I asked David about planning:


Ian: "I know you guys don’t like long-term plans. But you’ve decided to design your business in a certain way. What guided that process – just raw instinct or something more strategic?"


David: "We rely heavily on instinct. An instinct that has been developed and formed from a decade in business. Some times careful analysis is helpful, but often times you're just trying to justify what your instinct is already telling you. Why not follow that straight from the get go."