WHY BUSINESS PLANS ARE NOT ENOUGH – The ABC’s OF IT

It is like the alphabet without the “A”; in today’s business, the capital “A” is most often missing.

As obvious as it sounds, all businesses start with an idea – the “a.”  The entrepreneur takes the idea and translates it into a business immediately or builds the strategy for it inside a business plan. The capital is raised, the business launches, then in time, it either fails or succeeds. It is a process: It starts with the “a” – an idea; next comes the “B” – the business plan; then hopefully, the “C” – capital. Business is truly about the ABC’s. But more often than not, that process is flawed; and the use of the small “a” within this paragraph is not a typo.

The flaw is in the little “a” versus the big “A.”  Financing is important. Executive talent is important. Marketing is important. But the single most important element impacting success is found in the level of perfection of the idea itself.  From a Concept Modeling™ perspective, the small “a” is an “idea,” the big “A” represents a perfected idea.

Occasionally, entrepreneurs have the “perfected idea” from the get-go – they have the big “A.” It stems from instinct, experience or sometimes luck. They still need the means – capital and opportunity – but given that, they can reach a significant market share or even create a new market harnessing their intuitive vision. But most ideas do not start that way– and it is extremely risky. Most ideas need work. And the truth is, it is hard to tell the difference.

Almost by definition, entrepreneurs know their idea or at least they know what they want, so they jump into the business or the business plan. The rationale for the latter is either that they know enough about their idea to write the business plan or they use the process of writing a business plan as a way to develop their idea.

Investors prefer to see a business plan because it forces the entrepreneur to plan out how the company will make the money to pay them back with a profit. When it comes to ideas, investors may ask tough questions, they may probe the entrepreneur’s vision based on their presentations, but there is no definitive, independent tool for evaluating ideas. Most of the time, it is the marketplace itself, which serves as the final voice in the evaluation of ideas. The idea takes off and starts to generate solid revenues, or it cries for readjustment; it develops a limited market, rockets to the top of the market or it fails.

The problem is that today most people use a business plan as a way to flesh out ideas when the true strength of a business plan is in building strategy, not in perfecting ideas. In an economy where there is no money to waste, we need to look at tightening the idea first.

Engineers don’t build better cars through business plans. Technology is not perfected by a CTO creating spreadsheets on revenue forecasts. Great stories for films are not made using targeted demographics or competitive analysis. Success in business comes from ideas that are perfected.

But how do you perfect ideas?  You must analyze them then model them. This is not easy to do since ideas are not tangible. You can’t take them apart as you might with a car in your garage. You can’t lay out the pieces on the garage floor — with the carburetor over here and the muffler over there — then pick them up and study them easily.

Still, this is “a” must. It is the first “A” in the ABC’s of Business Success.  Keep in mind that “A” does not stand for ancillary ideas. It is too easy (and it happens a lot) for  a CEO or an executive to get lost in ideas that are not part of the core concept of the product or service. If you are developing an idea for a business, you need to analyze the core of your idea and focus on getting that perfected, first. You must take your primary idea and analyze or model it, which why our brand of service is called Concept Modeling™. The core concept must be modeled.

The true revolutions and innovations in business, the true market winners, originate from products and services that tackle the core ideas of that product or service.

                                                                                                            Copyright 2009, Winston Perez