Friday, October 7, 2016

Create Plan B When Your Plan Does Not Work

Create Plan B When Your Plan Does Not Work
Business Tips. There is a problem that afflicts both startups and companies with character equally when launching a new product or line of business is blindness. A blindness that leads them to consider that the only way to success is that they have taken, and should persist in your way against all odds but often what awaits is the abyss.

It is normal to be so. Not because they are not doing their job well or because they have not sufficiently analyzed the market. It is because the main partner to start a new business venture is uncertainty. About who the customers are, what they really want, how they want us to relate to them about everything. In this environment, it is dangerous romantic arrangement played everything on one card, that Plan A and try to emulate the spirit of those pioneers who bravely venture into uncharted territory, burn their ships and, after many vicissitudes and risks achieved its goal .

Make no mistake. Google, Facebook or Amazon are islands in a sea of ​​companies that were unsuccessful in their first adventure. Nor the second, usually.

In fact, statistics say that almost never works out Plan A, and in many cases no Plan B, so what's the point to burn the ships and embark on a one-way trip? One of the culprits of this attitude, at least in part, is the business plan because after having spent weeks (if not in months) to analyze in detail all aspects of the Plan A we think we know everything, what We have learned is the reality which is not true.

Surely we have learned much from our side, how to organize operations, how we want to sell the customer, how cost structure, what resources need but usually all that is beyond the boundaries of the firm are simply assumptions. For instance:

Do we know if the customer really is sensitive to our product or service?
Are you willing to pay for what we want to collect? Are the channels through which we communicate and to convey our value proposition are suitable for him? Are there more customers with this profile to which we can access? How big is your addressable market? What kind of relationship we establish with customers?

These are just some of the questions that really, and with heart in hand, we have no idea of ​​their responses. And it is normal because most of the answers only know once we are operating. Does that mean that then you better go ahead without the customer, crossing their fingers that when we launch the product or service the magic takes place and the customer is crazy to buy it?

No, what I mean is that we should raise the release otherwise we understand that our plan will most probably fail so better identify areas of risk and assumptions on which the business model is based as soon as possible and they will be the ones to tell us if it is time to abandon Plan A and pivot the model to the Plan B (or Plan C). What does this means?

The road will be long, and is plagued by doubts, experiments and developments, so you better keep costs extremely low threshold until we find the plan that does work and get the product-market fit. This has a clear and strong involvement that we should make explicit: if you only have money for Plan A, probably better idea that you do not throw until you have funds to pivot 1 or 2 times because if it is not very likely that you run out of money halfway through the race, which would be a tremendous waste do not you think?

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