Business Plan or Business Model?

While researching the “Experts views on the Value of Business Plans,” I came across two gentlemen who believed that business models held more weight than the actual business plans themselves.  I found this to be almost baffling. In almost every business class that I have taken, I have been taught that in order to have a successful business, you need to have a successful business plan.  Have I been misinformed all these years?

Steve Blank is a well-known entrepreneur who has founded many start-ups.  He has taught entrepreneurship at U.C. Berkeley, Stanford and Columbia.  While most of these schools emphasize on students creating a business plan, Blank suggests that they focus on the business model.  Blank states, “we’ve discovered that startups are not smaller versions of large companies” (Blank, 2012).  Blank stresses that his students focus on their customer development process, and not their business plan. “Failing to involve customers and their feedback from literally the first day of a startup’s life, keeping the most vital opinions silent“(Blank, 2012) is what Blank’s calls a start-up sin.  Another reason a start-up “sucks” according to Blank’s is “they’re solving a non-problem” (Blank, 2012).  “Entrepreneurs need to switch smartly out of ‘do’ mode and return to the earliest ‘discovery’ steps to find a distinctive, exciting solution to a seriously painful customer need or problem” (Blank, 2012).

Carlos Slim is the “Mexican telecommunications king, but also owns many various other businesses from hotels to sodas” (Clark, 2012).  Like Blank, Slim’s focus was on the business model and not so much the business plan.  He achieved great success in selling prepaid phone cards. “Many individuals in Mexico have a very low income or no regular income, many opt for prepaid minutes” instead of a home phone (Clark, 2010).  Although he owns a technology company, Slim prefers to use pen and paper instead of a computer (Luhnow, 2007).  His business perspective suggests to “create a simple organizational structure with minimal hierarchies; provide personal development and in-house training for executives” (Calvo, 2012). Slim started a group called ‘Fathers and Sons’ that invites Latin American billionaires and their heirs for annual meetings” (Luhnow, 2012).  During the meetings there are seminars that focus on ‘How to Run A Family Business’ (Luhnow, 2012). Slim also suggests entrepreneurs have clear objectives; reinvest profits and corporate creativity (Calvo, 2012).

After reviewing the background and views of both individuals, I believe that I will have to do both.  I will have to create a business plan to include the nuts and bolts of my business idea. But, I will also have to gain feedback from my customers in order to properly assess my company.  But, before I do both of those I need to identify if my business is a solution to a problem.

Blank, S. (2012). Steve blank. Retrieved from http://steveblank.com/about/

Calvo, J. (2012, August 9). Expert views on business plans. Retrieved from http://bpexpertviews.blogspot.com/

Clark. (2010, November 22). World’s wealthiest man carlos slim interview: No scarcity for slim. Retrieved from http://therisetowealth.com/?p=607

Luhnow, D. (2007, August 4). The secrets of the world's richest man. Retrieved from http://online.wsj.com/article/SB118615255900587380.html