Brian Armstrong

Business Plans Are Bullshit

Breaking Free reader Rui writes in with the following question…

Can you suggest where to get help in order to develop a business plan?

Hi Rui,

What most people mean when they talk about business plans is a 25 page document with lots of fancy stuff like an executive summary, break even analysis, excel graphs, and market segmentation.

Personally, I’m not a big fan of these. I wrote one back in 2004 for my tutoring business and I think they are bullshit for one primary reason: almost everything I predicted in it turned out not to be true.

It’s nothing more than guess work and it turned out to be a pretty big waste of time.

One of my pet peeves about people starting businesses is that they spend way to much time THINKING and not enough time DOING. I fell into this trap too. You don’t need to guess if something is going to work and model it in Excel when you can just do it and find out for real!

This is why I’m a big fan of finding quick and inexpensive ways to try out new business ideas.

Instead I suggest you do a quick and simple business plan which answers some key questions and makes some rough estimates. Preferably, it should be drawn on the back of an envelope with lots of scratching things out, and it shouldn’t take more than a few minutes.

Here is an example of a good business plan:

Two Minute Business Plan

Some things I like to jott down and think about:

  1. Can it help a TON of people (estimate some revenue #’s to help yourself get excited)

  2. Does it scale well (i.e. is it passive, does it require my personal time to help each additional person)

  3. If it really took off, would it fit into my lifestyle and would I enjoy it?

  4. Would it be fairly quick and inexpensive to test out the idea (this is important since 9 out of 10 of my ideas don’t work)

  5. Does it have a high profit margin (this covers up mistakes and keeps you out of commodity businesses where you can only win on price, a bad place to be!)

  6. Can I do significantly better than solutions that already exist out there (a quick Google search usually answers this)

  7. Can I sum up the biggest benefit (or value proposition) of this business in one sentence?

I think all great business ideas can be summed up in one sentence. Play around with it at the bottom of your “business plan”. If you can’t get it into one concise, clear sentence, you probably don’t know what you’re doing yet.

If it seems to have promise, then take a night to sleep on it and then get to work building it! Don’t give yourself a chance to fall into “analysis paralysis” where you eventually end up doing nothing on it.