Usa business

Who Should Read This Article?

Anyone nursing a new (especially untested and unproven) - idea for a business, and/or who is at a loss as to whether or not it will be beneficial to undertake a formal business plan preparation process. The ideas presented in this article are just that - ideas. You are expected -- and strongly encouraged - to apply your discretion in assessing their usefulness or relevance to your situation.

“Market research does not work. One cannot do market research on something that does not exist.” - Peter Drucker

Entrepreneurs are often dreamers

They are typically people who start businesses in new areas, that previously did not exist. Their ideas can therefore sometimes be met with resistance especially from people called “experts” who are famous for challenging the practicality or logic (from the expert's perspectives) of any new, unproven or unusual idea.

Business Plans Versus New/Uncharted Markets

Most of us have heard or read about the importance of going through the motions of preparing business plans before starting a new business. However, what few people take note of is the fact that some of those who have succeeded in business did not have business plans when they started their FIRST businesses - even though, they probably never intended for it to be so.

This is especially true for those entrepreneurs who had to enter an uncharted market i.e. who set out to do what had not been done before. Their new product or service could therefore not be compared with any known standard, since nothing like it existed at the time. If that sounds anything like the kind of business idea you have in mind as a first-time startup, you may have to contend with at least two challenges.

Two Challenges:

1. A business plan might not be as good an instrument to convince your potential investors(banks, venture capitalists etc), as the personal conviction, enthusiasm, charisma and passion you demonstrate for what you want to do! For instance, the “experts” among them, who the rest might look up to for assessment of the viability of your proposed venture, may not reckon with your idea if it is new or unusual. David Sarnoff certainly would have understood this point!

Sarnoff, who invented the radio, had to endure what must have been heart-breaking rejection from those he approached to invest in it's production. Among other things they could not see THE radio(!) as commercially viable, arguing that no one would pay to have a message sent to no specific recipient!

If only they could see us use that same radio now! :-) Sarnoff's associates could not - at the time - see what he was seeing! And that's what a first-time startup with a new idea needs to keep in mind. People may not see what you see - at first. That will not mean you are wrong, and they are right - no matter how many they are! If it was so obvious in the first place, you probably would not have been the first to discover it!

2. You might just find that the market is not exactly ready for what you have - even if the idea is quite sound. Again it would be up to you, to “create the demand” for your new product or service idea in the market.

For instance, incredible as it might sound, the telephone that is such an essential requirement for our existence today, was described as having "too many shortcomings to be considered as a means of communication" in a Western Union Internal Memo.The memo concluded that the telephone was of no value to the organisation. But that was way back in 1876! We all know that no business that desires to succeed today will operate without a telephone number.

It's all about vision. Entrepreneurs are people who apply their creative thinking skills to explore what can be, instead of dwelling on what is, as most others do. That tends to make them see far beyond what people around them can - sometimes causing them problems with others. I believe it was Robert Schuller who said "If you want to be a pace setting thinker, you can expect problems with people - especially those trapped by tradition." A first-time startup with an unproven business idea is most likely to experience this.

"If fifty million people say a foolish thing, it is still a foolish thing." - Anatole France

Two Case Studies

Below is a description of two first-time startups who were so closely driven by their circumstances, that they could find no use for a business plan in starting up what eventually turned out to be successful ground-breaking ventures.