Musings on Entrepreneurship and Innovation
Wednesday, November 17, 2004Poking Holes in Your Own Business Plan
John Osher, a very successful entrepreneur, keeps a running tab of the key mistakes he's made long the way. At the top of the list is the following:
Mistake 1: Failing to spend enough time researching the business idea to see if it's viable. "This is really the most important mistake of all. They say 9 [out] of 10 entrepreneurs fail because they're undercapitalized or have the wrong people. I say 9 [out] of 10 people fail because their original concept is not viable. They want to be in business so much that they often don't do the work they need to do ahead of time, so everything they do is doomed. They can be very talented, do everything else right, and fail because they have ideas that are flawed."
I currently have the pleasure of working with a small group of very smart, talented, and experienced people on a startup. I'm very excited about the concept, the people, and the potential of the business. That's why the current phase of work is so hard, because it involves a relentless effort to punch holes in our own business models and strategies.
It's tough work, but it's easier and better than the alternative. That's because:
- All models are wrong; and initial business models are often wrong in fundamental ways.
- Time and the market will reveal all flaws.
- It's cheaper and less risky to identify and mitigate big flaws in advance than it is to wait.
I've been found guilty in the past of falling in love with my own ideas. Consequently, my business plans have sometimes erred on the side of advocacy rather than exploration. I've bought my own bullshit to the detriment of what otherwise might have been viable or more successful initiatives.
Entrepreneurial business, in particular, is damned hard. That's why it's important to really love what you do with a passion. It's a challenging path, so it should be a path with heart. But tough love is the best strategy. It may be difficult to embrace the inevitability of important flaws in your vision, but that doesn't make the importance of aggressive self-critique any less necessary.
