You might be sitting at a desk right now, have googled “Business Plan” and have landed at this article – awesome. Read below, take your business plan, press delete, empty your recycle bin, close your computer and just move forward testing your idea in the real world.

Let me first distinguish a business plan from the process of planning. A traditional business plan is one with many hours of research, industry analysis & stats, meticulous projections, careful descriptions of your target market organized into a nice clean document with pretty charts. Chances are – for the typical creative professional – you have never made one of these – but there are still many of you who feel this standard business convention is a must before starting a venture or new business project.

For those that have sat down to write a formal business plan prior to launching a business or new project – you’ll know what it’s like to look back at it after one year, or even a few weeks. It looks silly, naïve, simple, and wonderfully optimistic. Words, numbers, charts with lines heading up and to the right. The research looks solid. Risk is minimal, potential is huge and your future life looks grand.

Early in my career I believed in the business plan. After my first business launch I remember sitting in a café about 1 year into the business and reviewing the planning doc – with its headings like “SWOT Analysis”, “Target Market”, and “Operations Plan” jumping off the page with foolish optimism. Ah. I just wanted to delete the f’ing thing for fear someone would see it and brand me an idiot. I was embarrassed about how little I knew – about the simple mindedness of it. Did I really not know logistics would be a nightmare? That the target market was 20 years younger than expected? That cash flow would be so ugly? Damn.

Then I started to notice a pattern. All formal business plans are steeped in naivety after about 1 year, or even less – sometimes outright silly after 1 month. I wasn’t alone:  in turns out all entrepreneurs are eventually embarrassed about their plan A. We’ve witnessed this challenge time and time again at Measure. Young business owners armed with an exciting idea have designed the perfect business on paper. The projections are always conservative estimates that yield huge dollars, the market always ripe for the idea. Shit’s tight in those plans and nearly bullet proof. This is the first day of a disappointing year (or more) for these business owners. It won’t go to plan.

The ugly side of business planning:

Villain #1: Misguided Overconfidence

Overconfidence is a killer with business planning. Most entrepreneurs approach the exercise to support their argument. Massive bias towards the lovely idea results in simply creating the story you want to hear. It’s all good stuff. Even the risks are self-inflating, identifying the business risk as “growing too much, too fast”, just like the typical job interview answer to the greatest weakness question, “Oh, well sometimes I work too hard.” The scary result:  a stubborn closed mind – generally moving forward with the plan until it’s far too late to admit it. Important lessons and course corrections are not accepted early enough. Misguided confidence fades…but all too slowly. Dollars spent on plan A limit flexibility and create a “sunk cost mentality”: I’ve spent too much to turn back or I’ve signed a lease and hired this team – I’m not giving up. Don’t give up, but be willing to change & adapt.

Villain #2: Misguided Doubt

On the flip side, doubt and fear can arise from a business planning exercise and have a terrible impact. Too many competitors, similar services, declining market prices (99designs) might all push someone away from pursuing a great idea – a fresh take on something – a recombination of ideas that is better than what exists. I’ve witnessed this fear of failing push near entrepreneurs away from their ideas and keep them posted in their desk job that they loath. A “this might not work” mentality in your head overrides your ability to believe in your idea. Or worse, the great idea gets watered down to something numb and safe.

Business Model not Business Plan: Real World Testing

In “Getting to Plan B”, a book we recommend to our clients, the authors simplify the planning process down to creating “hypotheses” within a business model: Ideas that need real world testing. This is really the only way to build a successful business. To TEST your ideas and ITERATE towards a better version of the business. Plan A will not work. Plan B might work. Plan C will be even closer and Plans D to J will be minor tweaks towards a great business.  Delete your traditional business plan and just get at it. Liberate yourself from the burden of knowing all and just move forward.

Plan A – your business plan – is obsolete at about the 7 minute mark after spending the first dollar on your new business. The market will be slow or fast to react, the product or service will be imperfect, pricing will evolve, new ideas will come up, partnerships will emerge, opportunities will present themselves and cash flows will certainly be tighter than what your business plan indicates.

Some of the healthiest design businesses we work with started “by accident”. Doing freelance side projects led to a cool opportunity which required leaving the full time job to deliver. This big project attracted more clients, a unique approach, a focus, a portfolio, a team – and eventually a solid business model.

Why is this? These entrepreneurs are by default flexible and open minded. It was just a side project. If it didn’t work they would take another approach. Learn about their craft and improve. Build the business model as it evolves. If they fail, it’s ok, they have a full time job. This openness and lack of fear led to an ability to change, adapt and flow naturally through business test phase with a healthy perspective – even if they didn’t know it.

 Business Model Testing 101:

 BE OPEN – Be open to the fact that your idea will evolve in an unexpected way

CREATE HYPOTHESES – Write down a set of things you don’t yet know – that you’ll have to learn in order to know that you’ve got a good business. Examples: “I can charge $95/hour”, “I can get 5 clients per month” – whatever key elements it takes to make your idea a successful business – are your hypotheses.

START SMALL – Get started early, but don’t go all-in from day 1 spending your life savings in one go or taking on a 10 year lease without a single client. Share office space, get a few clients, and start evolving. If you grow, don’t hire but bring contract freelancers on board. Take incremental steps forward.

TEST – Take your business idea and start testing it. Will people pay you? How much? Is your work good enough? Are you good at business development? Are you getting more clients? Better clients? During this phase, a primary income source is nice…it will give you the flexibility to act without fear.

ITERATE – Look for opportunities to change and adapt. Are you making enough money for your time? Do your clients like your work? Is there something that you’re particularly good at? Bad at? Embrace a Plan B and even Plan C to H.

ESTABLISH – throughout this process, the iterations will decrease in scope and the hypotheses will become proven or disproven. Your business model starts to form to a point where you can dig in, deepen your expertise, expand your recognition and establish long term value.

With this approach – you will drastically increase your chances of success – reaching the best version of your business or project. Liberate yourself from traditional business plans and just move forward.

Recommended Books:

Getting to Plan B: Breaking Through to a Better Business Model

Icarus Deception: How High Will You Fly?

Make Ideas Happen