Many people believe that in order to create a successful business, you must create a flawless business plan before you start your business.
In practice: a written plan is secondary to understanding the critical function of your business, and not matter how much you prepare, there will always be surprises along the way.
Even if the business plan is very very good: many things can go wrong, and some of them can kill you:
- The plan might look great but the numbers are very wrong. Expect the numbers to be wrong. But if they are completely wrong and the business cannot adjust, then you might be out of business. For example:
- under-estimated market risk: demand is 10 times lower than expected;
- under-estimated technology risk: it takes twice as long and 5 times as much money to develop the product
- The plan is great but the team is wrong: people who are good at preparing business plans are not necessarily good at executing them!