Some tips for planning in a bootstrapped startup. Planning is a means not an end, but without planning, everything encountered is completely new.
Planning in a Bootstrapped Startup: a Model from Will Kamishlian
Will Kamishlian responded to Pelle Braendgaard‘s 2005 blog post “Bootstrap Anti-Pattern #3: The Evils of Business Plan” with the the following comment:
Planning is a means. Yes, if it becomes an end, then there is a problem.
Without planning, everything encountered is completely new.
Eisenhower observed that “plans are useless but planning is indispensable,” and will continues in a second comment with a very interesting proposal for continual planning in a bootstrapped startup. I have bolded some key phrases for emphasis that were in normal weight in the original.
I do think bootstrappers might benefit from a custom method for planning. It would seem to make sense for them to plan faster and more frequently albeit with much, much less depth than one finds in plan for investors. Think of it as a journaling exercise that looks forward to set key dates, continually reshape key estimates and tag newly identified opportunities for quick investigation or prototyping. It might also provide an easy way to consciously prioritize competing opportunities, etc.
Such a plan could be something knocked out in no more than an hour on a weekly basis, and it might actually benefit from a dedicated template, provided, of course, that the entrepreneur is thoughtful in preparation. It would also serve as a journal of where the startup has been and what ground has been covered.
Adapting von Moltke‘s observation that “No battle plan ever survives contact with the enemy” for a startup you might say that no startup’s product or operating plan survives contact with the market, either in the form of customers or competition. But prior preparation enables quick response and will likely allow you to avoid unnecessary expense and some mistakes. His suggestion for a journal format is also a good one, and one of the reasons why we believe that a wiki page makes a nice medium for your operating plan.
I like Mr. Kamishlian’s comments a lot–although I have never met or corresponded with him–they contain a succinct problem statement and guidance that corresponds to our prescription for an appropriate level of planning in a software startup.
Update Dec 1: Will Kamishlian and I were able to exchange e-mail, his e-mail read in part (emphasis added (to another great insight)):
My comments were more offhand than anything else; however, I would welcome an opportunity to discuss your post. I appreciate your use of quotations from Eisenhower and Von Moltke. As a student of history and military history, I feel that military quotations are often used without context; however, I could not agree more with the ones you chose.
We might also look to Patton, the consummate planner. Patton had his staff planning nonstop, often for contingencies that would never occur. Nevertheless, his staff planned and tossed out so many plans that by the time Patton needed to turn on a dime — as he did toward Bastogne — his planners could kick out plans in their sleep. Patton used their ability to plan to make Third Army the most agile force in the European Theater.
I responded to Pelle’s post because I strongly believe that the fundamentals remain, regardless of their current incarnations. Planning is still important; however, the nature of planning is changing. A wiki or blog makes good sense for operational planning for Web businesses. Either have the added bonus of allowing others to view and respond.
I think a single page strategic plan would work well if it has the right discipline and information. I think first of what is termed the “elevator test.” An entrepreneur may well be in trouble if he or she cannot explain the business concept in the time it takes to make a trip up the elevator. Secondly, I would include an exit strategy and timetable. Failing that, the plan should describe the means by which cash is to be reaped in addition to estimates of time and amounts.
A strategy for generating cash follows Von Moltke’s observation. Nevertheless, plans for cash flow could remain fresh via a brief weekly blog or wiki entry. Cash generation strategies may well be overlooked by many entrepreneurs. There seems to be some consensus that moving faster is more important than identifying the target. A weekly blog might also have an additional benefit of documenting changes in financial assumptions as the business adapts.
I learned much of what I know about entrepreneurship from one of the founders of Jiffy Lube. One of his simplest pieces of advice is, “Sometimes you need to be on the dance floor dancing. Sometimes you need to be up in the balcony watching the dance.” A weekly planning review provides “time in the balcony,” and such a discipline creates the ability to log new opportunities and threats.
The prolific Shawn Hessinger also responded in “Five tips for bootstrap business planning,” noting comments in an earlier post “Are Business Plans Really Evil” and offering perspectives from Fred Wilson and the comedy team of Rex and Eddie as well his own tips. I found his number four worth repeating here
Focus on sales first. Plans that involve lots of investment and work before achieving any kind of reasonable cash flow are problematic. Instead use your plan to figure out how to start making money immediately then reinvest to grow your venture.
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