Lean Startups Need Business Planning Too 1

My monthly column at Entrepreneur.com, Lean Startups Need Business Plans Too, came out yesterday:

But here’s my beef in a nutshell: When Ries and Blank criticize the business plan, they are talking about a now-obsolete approach: the formal written business plan. They say it gets in the way of the more agile and flexible lean startup process. But what they criticize isn’t what a business plan should be. In fact, it’s what a business plan shouldn’t be.

Ironically, the problem isn’t really related to the core ideas of the lean startup movement, as taught by Eric Ries and Steve Blank and a lot of others. They all appreciate the planning process that involves setting steps and milestones and metrics and following up with management and regular revisions. Ask any of them whether they believe in focus, and allocating resources, and setting tasks and deadlines, and they’ll all say yes.

So don’t get confused. Whether you’re looking for investment or not, whether you’re applying for a bank loan or not, don’t deprive yourself of business planning. And, even more important, if you don’t need the whole big formal document, don’t do the formal document. But use good business planning to manage uncertainty and steer your business.

Here’s a bit more from yesterday’s column:

It would be better to advocate a type of business planning that could be called lean business planning. That would mean starting small with a business plan that summarizes the current strategy, metrics, milestones, tasks and basic responsibilities. You don’t print it, much less edit, polish and publish it. You just use it.

A real business plan should grow organically, just like a lean startup. The process starts with a concrete and specific plan for what’s supposed to happen and continues forever with regular review and revision.

Do yourself a favor. Plan your business. Start with a first plan and then review and revise often. You’ll be glad you did.

Startup image courtesy of Shutterstock

About the Author Tim Berry is the founder and chairman of Palo Alto Software and Bplans.com. Follow him on Twitter @Timberry. Follow Tim on Google+ Read more »

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  • http://twitter.com/GeraldNitram Gerald Martin

    Sounds like an agile process. It makes me remember the days when I was in college in that software engineering class. Anyway, it does make things a lot better in the long run because you’re able to modify the things that need to be fixed along the way. Compared to a plan that can’t be modified while it’s running, something that you can fix midway is a lot less risky.

    = Gerald Martin =
    http://www.endlessrise.com/