Don’t Write Business Plans (Article)

Article: “Don’t Write Business Plans: Advice for Startups from One of Silicon Valley’s Top Seed Investors”

This is an article interview with Dave McClure, a Silicon Valley based VC from 500 Startups. You can read the entire article linked below, but here is a quote of his advice for startups:

1. “Don’t write business plans; instead build prototypes & test them with customers.

2. Don’t create 5-year revenue projections; create 12-month expense projections.

3. DO create marketing plans, but focus on unit economics and metrics / analytics of: a. what customers cost to acquire, b. what products cost to build/deliver, c. how much customers generate in revenue and when

4. Test and iterate on your assumptions — turn your business plan into a business metrics dashboard of KPIs, and continue to measure and improve every week.

5. Don’t run out of cash. Check your monthly burn rate, cash in the bank; figure out your remaining runway and try not to get below six months of cash.”

I agree with him regarding the business plans. Sometimes it doesn’t make sense to apply yourself writing business plan after business plan, which is extremely time consuming. Put your ideas together, and create yourself a minimum viable product. That way you can really test out whether this is worth doing or not. This is part of what is becoming much more common, in that people create plans on how to go to market, but not necessarily how to generate revenue. It is all about building a user base!

Source: Forbes Article: Dont Write Business Plans


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