The past five weeks we spent almost the whole time on writing a business plan in order to get seed capital from a government funding program. In this post we try to answer the following question from our point of view: What did we learn from writing the business plan and was it worth to spend so much time on it?
First of all, writing a business plan is much more difficult and time consuming than we thought. We planned 2-3 weeks and it ended up being 4-5 weeks to write about 20 pages - and keep in mind that we are a team of 3 people. So how could writing the business plan consume so much time?
The first obvious reason is that we don't have an MBA. So we had to learn everything from scratch. But in the end we learned a lot. I mean, as a founder you really should know about the most important basics like some marketing knowledge, the market size, the importance of the team, ... and metrics, especially to see if your business idea is worth realizing. This step helped a lot in understanding what it means to found a startup beside making the product itself.
Secondly it was especially hard to find even one market analysis. A large part of our work consisted of estimating how big the market is especially for each segment and we are still not satisfied.
The last reason and maybe not the most obvious one is that writing the business plan resulted in getting things straight between the founders themself. It seems that each one of us had at least a slightly different idea of what the product actually is and which customer group the product should to target. Writing the plan clarified much of these differences but most importantly added different ideas to the product and its realization which actually let the whole idea mature.
One big suprise was that working on the plan actually was more fun than expected. In the last five weeks the desire to realize the idea grew so big that we would like to start immediatly. :)
What would we do if we didn't need the funding program? Actually we would work more iteratively using a business model and directly talk to customers. In the end, this would most probably result in the same learning effect while saving about 2 weeks of work.
Taking our current situation into account, writing the plan helped the team and the whole idea to mature and was worth the effort even though we know that a business plan won't survive first contact with the customer.