Do You Have A Plan? – Most Likely Not
To quote the old adage “Failing to plan is planning to fail”. This may be a cliche, but there’s a compelling amount of evidence for there being an element of truth behind this often coined phrase.
There are many recent surveys carried out which ask over and over whether organisations have a clear digital marketing strategy, or even a marketing plan in place.
Here’s just a couple of results: Referring to 2013 – “Just over one third of marketers (34%) did not have a marketing plan last year” according to a report by Marketo. However, that percentage varies significantly by company size, with the smallest companies (fewer than 50 employees) least likely to have a documented marketing plan (only 56% reported having one for 2013) and the largest (1,001-5,000 employees) most likely to have one (81% reported having one).”
Back in 2011 – “74% of small businesses have no marketing plan”. “The survey highlighted that 89% of small business owners considered marketing as either their first or second priority, yet an astonishing 74% said they did not have a marketing plan!” http://www.daniellemacinnis.com/small-business-marketing/74-of-small-business-have-no-marketing-plan/
Do You Need To Write A Business Plan?
It’s widely thought that if a business has a clear plan then it’s more likely to turn into a success story, than if there is no clear plan for moving forwards. This imbalance of opinion in favour of a clear business plan was brought very much into focus as far back as 2007 when a controversial article was written by Kelly Spors of The Wall Street Journal, which questioned the need for startup entrepreneurs to bother to create a formal business plan, caused quite a fuss and debate.
Interestingly, that page is now no longer available on the Wall Street Journal website although commentators still link to it unwittingly.
Maybe it’s a technical error (some 404 which has gone undetected (and 2007 is a long time ago of course – plenty of opportunity for a 404 to creep into a site as large as The Wall Street Journal)), but I have my suspicions that that article was quiety removed as the furore it created died down – http://online.wsj.com/article/S70110SPORS.html – could be wrong of course 🙂
Tim Berry, Author of The Plan As You Go Business Plan and 3 Weeks To Start-Up wrote in response to The Wall Street Journal article (with a link to the Wall Street Journal article – broken link still intact), a piece on The Entrepreneur website whereby he says “I feel it’s very dangerous to tell start-up entrepreneurs they don’t need a plan. The truth of the matter is most of us need more planning, not more rationalizations for not doing it.”
On the rationale for creating a business plan, Tim continues:
“Everybody running a business wants a business plan to help focus strategy, manage milestones, manage metrics, assign and track responsibilities and performance, and manage money using projections for sales, costs, expenses, and cash; and managing plan vs. actual results every month.”
Not everyone disagrees with Kelly Spors, however.
Business Plans For Funding – Neil’s experience is that most VC’s and other investors aren’t interested in business plans, they’re interested in backing businesses that are already up and running and if a business plan were produced very few would take the time to read it. (He’s right of course, particularly with online businesses, which are often conceptual in nature and require a certain type of visionary that your average bank manager probably doesn’t possess, preferring to back the safe, tangible bets).
Predicting The Future – Neil rightly says “You can’t” (I doubt there would be a challenge from anyone on that one). His argument is that you’ll often “have to rely on your intuition and make decisions on the fly as things change. No written document can account for this”.
Time Is Money – Neil feels that the time you spend on writing a business plan is better spent on working on your business.
He quotes, in conclusion a few words from Steve Rappaport:
“Many successful businesses today would not withstand academic scrutiny. A perfect example is the company Red Bull. There are so many holes in the plan without the 20/20 hindsight. I can imagine what would have been the comments — didn’t we do this in the 80’s as “jolt cola” or “entrenched drink competitors will crush you if it ever becomes popular.” I think a plan is good, but serendipity and opening the business up for opportunities can be even better. In other words, diverting from the plan. Red Bull’s initial aim was a drink for long-haul truck drivers.”
Growth Before Monetization – How Will You Even Make Money?
And with that, comes another discussion which must be thrown into the melting pot regarding whether businesses need a clear plan – did the businesses even start off with the goal of making money?
The digital landscape is littered with businesses who’ve clearly not had a real strategy for monetizing their online offerings from the start but have ridiculous volumes of traffic flooding to their site, and may have even come about as accidental successes or ‘hobby’ sites gone crazy.
Fuelled by their frenetic pickup by the masses but no-one spending any money along the way (other than the organisations and investors behind the sites themselves of course).
Yet many still float for billions in view of their future potential to reach and engage the masses without having even turned a profit.
Some of their founders even claim to have no interest in money as drivers for pushing their project forward.
The classic example of this is Mark Zuckerberg’s Facebook project of course (renowned for continually claiming he’s not interested in money), founded at Harvard in 2004 as a way of connecting students and ‘gossip’.
I doubt that at the time he understood the insatiable human nature for gossiping which fed (and continues to do so), the exponential growth of Facebook and social media overall. I doubt that he sat down with a logical business plan before he kicked it off either. It just took off.
Jack Dorsey’s Twitter is another example of an unexpected phenomenal success. Again, monetization was clearly not thought through from the start (they’ve still not turned an operating profit in 2014, some 8 years after founding in 2006).
Again, Twitter has floated for $30 billion so it’s investors are certainly not complaining, but with over 645,750,000 active users as of 1st January 2014 http://www.statisticbrain.com/twitter-statistics/ monetizing the platform somehow will undoubtedly transform it, so it’s the potential which provides the buy-in appeal.
Did the Twitter founders have a business plan for the platform, mapped out in advance? Again I Doubt it – it was born as a result of a side project which was developed by another company, Odeo, the podcasting company back in 2005 – Here’s a list of the early Twitter members who worked at Odeo at the time and where they are now.
Likely another phenomenal ‘accidental success’.
Google’s another one. Although the plan was always to make money, no-one knew how they would achieve it back in the early days. They just knew that they were onto something when they started working on the then ‘Backrub’ search engine.
Larry Page and Sergey Brin, Stanford students brought the search engine to life in 1996.
Their company was not incorporated until 1998 however, in Susan Wojcicki’s garage.
Ken Auletta’s book ‘Googled – The End Of The World As We Know It” (a great read by the way – I bought and read this whilst on my annual hols back in 2012), goes behind the scenes and tells of the young Googler’s traipsing around Silicon Valley looking for investors with nothing more than potential to show and the embryonic beginnings of an already launched search engine business.
For a time the organisation operated with little or no income, and without investors. Albeit, that was short lived.
When they did eventually find investors they only had this income to work with.
It wasn’t until Google launched the Adwords platform in 2000 that they found a way to monetize their offering.
The rest is history – their business is now considered ‘a verb’, they were voted the best place in the world to work, according to this nifty little interactive infographic they were making $1,873 every second as of November 2013 http://www.fastcompany.com/3021598/fast-feed/how-much-revenue-do-top-companies-make-each-second#5, and we are all joining the party when the horse has bolted.
Did they have a plan? I shouldn’t imagine so back then.
Just a great enthusiasm for something and a belief that they were onto something special that would also be believed in by the men with the money. And they were right.
More recently, 18 months after launching and with a phenomenal growth, Tinder are only just starting to think about how they will monetize their platform. Again, a “let’s see if it works then think about where the money will come from”.
So, Should You Have A Business Plan Before You Get Started?
Would the restrictions of a stringent business plan quash the insatiable enthusiasm of online entrepreneurs perhaps? It’s likely. However, would the online businesses above have turned a profit much quicker (or even now started to make a profit – e.g. Twitter) if they’d actually had a plan before launch? Debatable.
Enthusiastic, driven technpreneurs are really just doing what they enjoy most – rather like footballers (average earnings aside industry on industry) – they get paid for ‘playing out’, doing what they enjoy, what they’d probably choose to be doing if they weren’t getting paid for it – so maybe they don’t need ‘a plan’, as such to keep them going – they’re having fun.
My thinking is that having ‘no plan’ however, is absolutely a handicap for the more traditional business with multi-tiered management already in place (how else do you know what everyone is going to do and when – it’s chaos).
That said, working to the ‘handbook’ that can sometimes come from ‘the plan’ (this is the way we do things here mentality), in industry, can be incredibly stifling to progress.
I’ve sat in meetings where a conversation about whether a h2 section heading on a web page fits in with the brand over a h3 or not, has taken up half an hour – “FFS” entered my head on more than one occasion throughout that debate – and the endless meetings about meetings about meetings :(.
Your online entrepreneur would have made the call to have changed that h3 heading to a h2 and back again in less than a minute or two – job done, or not, and probably thrown in a h4 for good measure too, without the restrictions of ‘a plan’ that needs signing off at 6 levels of the company before implementation and 3 months down the line.
Examples Of Online Businesses Who’ve Launched Then Got More Organised
ASOS are a classic example of an organisation that ‘got organised’ and found great success from actually putting in place a clear digital strategy although they were already up and running.
I recently took the Smart Insight’s RACE Digital Planning course (highly recommended), and Dave Chaffey (Smart Insight’s founder and the tutor on the video’s covering the various module’s) gave the example of ASOS, who implemented PR Smith’s SOSTAC Planning framework in a digital marketing strategy, achieving great results from their new clearly defined strategy covering Reach (acquisition), Conversion optimisation, influencing of visitor Actions and Engagement with audience.
More information on ASOS’s impressive growth here.
Likewise, I’m sure that the likes of Facebook, Twitter, Google and Tinder now have a very clear plan in place – you simply can’t get to the size that they have got to and the number of bodies working together without some clear systems in place and some idea of how you’re going to get the next level of growth – and of course, we have analytics to help us on our way to measurement and control.
They just didn’t necessarily do it before they started, nor necessarily needed to by all accounts.