BBBT IV - The Startup Garden - Business Plans

BBBT IV - The Startup Garden - Business Plans

I have recently had the honor of reading Tom Ehrenfeld's book 'The Startup Garden'.  He has opened my eyes to some of the things that I have been doing right...and wrong...in my business.  Some of the things I have been doing have been accidently right and that is a key thing that this book helps you understand.  Why what you are doing right is right and why what you are doing wrong is wrong.  Tom is with us today as a part of the Business Blog Book Tour (BBBT) and has agreed to answer a few questions to enlighten us with what has been called "...a plethora of sound advice and timeless wisdom.", by his peers.

Q.  I must say that The Startup Garden is already one of the most dog-eared books that I own, and I just got it.  One of the most interesting chapters that is in the book is 'Planning is Learning, Learning is Doing'.  This chapter seems to fit one of my philosophy's of 'Just do it!'.  In a poll conducted on The Small Business Blog (TM) most of our readers don't have a business plan or have an out of date plan.  I wonder if you could elaborate a little on the importance of a plan and how it fits in with the philosophy of 'Planning is Learning, Learning is Doing'?  Also, do you feel that there is a point where you stop planning or is it a continual process that should be embedded into a business?
 
A.  About learning: One area in which I've definitely evolved my thinking since writing the book has to do with entrepreneurial learning.  While I hate to generalize about successful common traits among entrepreneurs, one thing seems clear to me.  Great entrepreneurs have a particular form of intelligence that serves startups, and that is experiential learning.  They display the ability to reflect on experience, learn from it, and successfully adapt behavior as a result (an intelligence I'd differ from emotional intelligence or academic smarts or technical chops, for example.)

Business plans are tied to this.  The process of writing a business plan forces an individual or team to be very clear and specific about how they plan to realize their goals. When I have a long or challenging piece to write, I need to have an outline in order to keep the key points in mind and see how to structure the piece in the most logical way.  The primary function of a business plan is to help the founder/team learn how they're going to gain entrepreneurial traction.

Some people don't need business plans.  If I'm taking a trip to somewhere I've been before I don't need a map.  But having one just might reveal a shortcut I never knew about.  And, since starting a company invariably involves exploring new territory, having a plan just can't hurt.

My point about business plans is that people should never confuse them with the things that really matter for a company's success.  Business plans are not a product.  Business plans are not the company.  You don't make money on a business plan, you can't sell a business plan, and you almost never show a business plan to a customer?who represents the heart and soul of your
company.

Business plans can be extremely useful in proving to potential investors that you know what you are talking about and that you have the right background, people, experience, and resources to deliver on your promise.  They can force you to break down your thinking and action plan into a visual format that reveals the flaws.  Business plans form a kind of structured thinking that enables you to have productive conversations with others in a common language, a business shorthand as it were.

Consider that small startup known as Toyota, which many people are identifying today as one of the best at organizational learning (really.)  Every project, large or small, that Toyota conducts, is governed by a document known as an A3 Report (named for the size of the paper.)  This
document identifies the goal, the challenges, and the way in which people will achieve the desired results.  It serves as a form of currency that the participants pass to one another to test out hypotheses.  It is commonly accepted at the company, and works because the culture is fundamentally based on the idea that learning takes place on the shop floor, and that people do it through trying stuff out.

So learning never ever stops.  Planning never stops.  And it happens in the most productive manner when it happens in the course of the business and not outside the business.
 
- Do you want to know what Tom Ehrenfeld knows?  Of course you do!  For a limited time only The Small Business Blog(TM) will have a direct link to Tom's book "The Startup Garden".  Go there now before the link disappears and you miss your opportunity.  It's FREE to get there.  Just click here and get your copy today!  Do it now, don't miss out! -ed.



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