Are business plans a total waste of time?

A survey carried out by business software provider Exact suggests that more than a third of the UK’s 4.9m SMEs don’t have a business plan and “they could be missing out on an extra 20% of profit as a result”.

Of the 34% of respondents who didn’t have a business plan, 68% said they didn’t see the need for one, while 23% were “too busy” to prepare one, 8% “didn’t have anyone to help them” and 5% “weren’t comfortable with numbers”.

Should we be surprised by these findings and are business plans as essential as some start-up experts would have you believe?

Some experts would tell you that start-up business plans aren’t worth the paper they’re written on

Waste of time

Some experts believe start-up business plans aren’t worth the paper they’re written on. Author Paul B Brown, wrote a piece for Forbes.com called Why Business Plans Are A Waste Of Time., after he came up with the idea for a new book that sought to offer insight from the original business plans of highly successful US entrepreneurs.

But there was a problem. As Brown explained: “Most of the business plans had nothing to do with what the businesses eventually became. People who said they were going to specialise in developing new computer hardware ended up in software, for example. In a surprisingly high number of cases, what was in the business plan ended up having very little to do with what the company ultimately became.”

After writing about entrepreneurs for more than 30 years, Brown believes that creating a “painfully detailed business plan really doesn’t make much sense. The first time you encounter something you didn’t expect, the plan goes out the window. Things never go exactly the way you anticipate.”

Some of the heroes of today’s would-be entrepreneurs, such as Steve Jobs, Bill Gates and Michael Dell, did not have business plans when they embarked on ventures that changed the world

Business plan myth

A few years ago, (“former banker, small-business investor and veteran entrepreneur”) Kate Lister wrote a piece for Entrepreneur.com called Myth of the Business Plan. She highlighted research from Babson College (“regarded as having one of the top entrepreneurship programs in the country”), which found “no statistical correlation between a startup’s ultimate revenue or net income and the supposedly requisite written business plan”.

The study found that: “”Some of the heroes of today’s would-be entrepreneurs, such as Steve Jobs, Bill Gates and Michael Dell, did not have business plans when they embarked on ventures that changed the world”.

Great business plans may earn you an A in business school, but in real life you only get As for achievement

Lister said she was “all for having a business plan in the verb sense. I’m just not a big believer in the noun form”. She continued: “Writing a formal business plan invites the paralysis of analysis. It distracts the entrepreneur from slaying dragons and thinking big thoughts. And it’s largely a waste of time. The result usually is a long-winded missive that’s out of date almost the moment the ink dries. Great business plans may earn you an A in business school, but in real life you only get As for achievement. So stop dotting your i’s and crossing your t’s and go out there and slay something.”

Success Plan

Andy Fox is the founder of “award-winning independent car service and repair specialist” iAutoUK. He wrote an article for the Huffington Post called “Why You Don’t Need a 40-Page Business Plan to Launch a Successful Company” (sic).

“I’ve never had a business plan,” he admits. “Despite this, in three years my company has reached a turnover of over £1m, with £100,000 annual profits. For your business to thrive you instead need a ‘Success Plan’. This is an evolving strategy consisting of three elements. No 40-page business plan needed. In fact, you can write a Success Plan on one sheet of A4.

Look at companies such as Comet, Blockbusters and Jessops. I’m sure their business plans didn’t include going into administration!

“Firstly, you must understand your market place and how your business is distinct from competitors. Secondly, the Success Plan must have ‘Leader’s Objectives’ and you must communicate them to your staff. The final element is to make sure you make money! You must have a system that provides you with daily earnings information, and which can monitor cash in the bank and in the pipeline.

“Such a Success Plan is a short, relevant, real-world document. I believe a Success Plan is more appropriate than a traditional business plan.” Dryly he adds: “Look at companies such as Comet, Blockbusters and Jessops. I’m sure their business plans didn’t include going into administration! Had they had a Success Plan, perhaps their futures may have been different.”

• This blog was commissioned by Atom Content Marketing and appeared originally on the Start Up Donut website.

The Flip-Flop Philanthropist

Rob Forkan has been on an incredible journey. With younger brother Paul he runs Gandys, which uses some of its profits to help orphans in India – just one reason this fast-growing flip-flop brand continues to win admirers. Rob’s amazing story, which includes surviving the 2004 tsunami that claimed his parents’ lives, as told to Mark Williams, proves that some good can come out of the most terrible tragedy.

Rob Forkan (pictured above right) was born in 1987 in Carshalton and grew up in Croydon. “Our upbringing wasn’t unconventional,” he says, “but mum and dad always encouraged us to go outside and play. Being a couch potato wasn’t an option.”

Kevin and Sandra Forkan were compassionate, fun loving, generous parents

Kevin and Sandra Forkan were compassionate, fun loving, generous parents. “Mum was creative; dad was good at business. They met while working for a car dealership. Later, they ran their own business, selling end-of-line clothes via fashion shows at universities, schools and hospitals. They’d donate back money raised from ticket sales and raffles.”

Rob didn’t have any career ambitions as a child, but showed some entrepreneurial instinct. “I remember earning money from washing people’s cars,” he smiles.

Humanitarian projects

The Forkans had six children – Marie, Joanne, Rob, Paul, Matty and Rosie. They enjoyed travelling and wanted their children to experience other cultures, so, in 2001, after selling their house, Kevin and Sandra took their youngest children out of school and headed for India, a place they’d fallen in love with on a previous holiday. The plan was to volunteer for humanitarian projects. “I was 13, Paul was 11, Matty was nine and Rosie just five,” Rob remembers. “Marie and Joanne were older and stayed in the UK.”

Despite the extreme hardship they witnessed, the Forkans loved India and enjoyed mixing with local people. “We received a ‘social education’,” says Rob. “We were learning communication and negotiating skills and became very confident because we were mainly mixing with adults. There are many life skills that you’re not going to learn from a school text book or classroom in the UK.”

The full force of the tsunami hit Weligama, with a 20-foot wave devastating the hotel, sending water raging through every room

Asian tsunami

Shortly before Christmas 2004, the Forkans flew south to Sri Lanka, their destination, the Neptune Hotel in the small fishing village of Weligama. After a hugely enjoyable Christmas Day on the beach, horror followed on Boxing Day.

“Paul and I were sharing a room and it was just after 8.30am that I heard screams outside,” Rob recalls. On seeing water trickling under the door, he shouted to Paul. Then, the full force of the tsunami hit Weligama, with a 20-foot wave devastating the hotel, sending water raging through every room. “We had to fight for our lives,” says Rob.

He managed to get out of the room and onto the roof, dragging Paul with him. Nearby, while making sure Matty and Rosie got to safety, Rob’s parents were swept away by the water’s force. That was the last time he saw them alive. Kevin was 54 years old; his wife Sandra, just 40.

Mercifully, all four children survived. And while bruised, battered, hungry, exhausted, barefoot and traumatised by what had happened, they managed to hitchhike 120 miles to the international airport in Colombo. “Because we’d been out there doing what we were doing, we’d toughened up a lot,” reflects Rob.

Rob’s parents were swept away by the water’s force. That was the last time he saw them alive

Free spirits

Some time after flying back to the UK, eldest sister Marie (then 21) adopted her three youngest siblings (Rob was too old for adoption) and they went to live in Hampshire. Rob worked briefly as a lifeguard on Bournemouth Beach, before moving back to Farnborough and finding jobs in customer service and advertising/marketing account management.

Neither Rob nor Paul had lost their wanderlust and they explored many countries in South East Asia, as well India, Australia, New Zealand and the USA. Most of the time they wore flip-flops – a symbol of their freedom. Having trained to be a plumber, Paul ended up in Australia, doing various jobs to get by. But inspired by their parents, Rob and Paul remained free spirits.

I wanted to start my own business and create a brand that reflected our upbringing and the outlook our parents gave us

“Despite everything, I still wanted to make a difference,” Rob explains. “I wanted to start my own business and create a brand that reflected our upbringing and the outlook our parents gave us. Many families were devastated by the Tsunami, and many children, like us, were left orphaned. They didn’t have the support we had. I wanted to help.”

After a heavy night at a music festival, Rob woke up with a terrible hangover. “I remember saying I had a ‘mouth like Gandhi’s flip-flop’… That was it! Not only did I have my business idea, but also the beginnings of a brand name. Later I rang Paul and he loved the idea. Soon he returned to the UK and in late 2011 we launched the business – Gandys – from my flat in Brixton. We changed the name because we didn’t want to cause any offence.”

Passion, change, hope and inspire are key words for us

Orphans for Orphans

From the start, the Forkan brothers decided to give a percentage of their profits over to building orphanages in India as part of their ‘Orphans for Orphans’ campaign. “The idea is to improve children’s health and access to education,” explains Rob. “Passion, change, hope and inspire are key words for us.”

2016 was a watershed year for Gandys. They collaborated with Liberty London, the V&A museum and the Rolling Stones on limited edition flip flops – which are now being worn by over 250,000 ‘brand ambassadors’. They also extended the brand further by launching their first clothing range – which included jumpers, jeans and swimwear – and they opened their first stores. The Forkan brothers have ambitious plans for the year ahead too! In addition to their Kids’ Campus in Sri Lanka, they will be building a second campus in Lilongwe, Malawi.

Final question: would mum and dad be proud? Rob replies: “I get asked that a lot and always struggle to answer… I feel like we’ve only just started, so I’m not ready to step back and assess things. We have great products and a great brand, and I’m very proud that our success will help to improve the lives of children who really need that help. Our parents remain a great inspiration for us, too…. Would they be proud of what we’re doing? Yes, I think they would…”

• This profile appeared originally on the Start Up Donut website. Since it was written, profits generated by Gandys sales have helped to build four kids campuses worldwide. The Forkans' good work continues.

Business ideas – the good, the bad and the crazy

One expert and three business owners discuss business ideas and how success can sometimes come from seemingly foolish thoughts.

Although a few businesses ideas are unique, many involve what Kevin Duncan describes as “conceptual blending”, which is taking an idea and applying it in a new context. “Add the delivery mechanism of a biro to stick deodorant and you invent roll-on deodorant,” he explains.

Duncan is a business adviser, marketing expert and author of more than 20 books for small businesses, including The Ideas Book: 50 Ways to Generate Ideas Visually. “Anyone can have a business idea,” he continues. “But if enough people aren’t willing to buy it to cover your costs and generate enough profit – you have no business.”

Asking potential customers as early as possible what they think of your business idea – and how much they would pay for it – is essential. “Before starting up, the founders of Innocent set up a stall at a jazz festival with ‘good’ and ‘bad’ bins. All people had to do was lob their empty smoothie container into one bin or the other. Easy, fast, reliable market research.”

“Many advisers say you should ‘always be in beta’, but I disagree. Get it right at the beginning and get on with it.”

Promising ideas can be refined, says Duncan, who believes you should test fast, then decide. “Many advisers say you should ‘always be in beta’, but I disagree. Get it right at the beginning and then get on with it.”

Duncan also believes in speaking to experts if you lack technical knowledge, because their input can make a big difference. “When testing business ideas you must be brutally honest,” Duncan stresses. “If it’s rubbish, start again. And again. If your ideas are never good enough, admit it and give up. It could save you a lot of time, money and grief.”

Recipe for success

“I came up with the idea while sitting at home thinking there had to be a better way to cook great meals without all the hard work,” recalls Timo Boldt. “Having to find recipes, go shopping, and weigh ingredients was painful, while inevitably you end up wasting food. I thought if someone could fix this for less than the supermarkets charge, it would be insanely amazing.”

Boldt started London-based Gousto in 2012 with friend James Carter. Customers can visit the website, pick recipes and then order pre-measured ingredients to ensure no waste, which soon arrive at their door. “We made many small changes before launching, but our first real customer feedback triggered much bigger changes,’ Schmidt confesses.

“Customer feedback is vital. We still obsess about listening to our customers – they drive our product roadmap.”

Soon they were testing their recipes from market stalls, where reaction was overwhelmingly positive, but they were still able to learn. Boldt says it’s essential to test a business idea thoroughly before committing time and money. “Customer feedback is vital. We still obsess about listening to our customers – they drive our entire product roadmap,” he says.

In less than four years Gousto has scaled to now support more than 200 jobs, selling millions of meals per year. It has attracted £20m of investment, while ex-LOVEFILM CEO, Simon Calver, now sits on the company’s board. Always seeking new ideas, Gousto has launched apps to make ordering even more convenient, while introducing more choice to the menu (which now features dishes created by Theo Randall and Mary Berry, as well as wine and desserts). “You must take time to develop ideas – but sometimes it does take a leap of faith,” Boldt smiles.

“While enjoying food and drink with friends, Kahana lifted up his feet. He wondered why most socks looked so boring.”

Socks appeal

Gil Kahana and Humberto De Sousa became friends while studying communication design at Central Saint Martins. One day they were enjoying food and drink with friends and as Kahana relaxed he lifted up his feet. He wondered why most socks looked so boring. Then he got around to thinking how much better socks could be if animated with characters (“almost like wearing sock puppets on your feet”).

“I suggested the idea to Humberto and asked if he would like to collaborate. Then we started to meet up once a week to progress the idea, because we both had full-time jobs,” he says. “We drew quirky faces onto white socks, to see what worked best. At first we didn’t really have any business ambitions, but it grew. We then asked people on the street in London for their views on personal expression through clothing. It confirmed our thinking: the characters on our socks should only become visible when shoes were taken off.”

Chatty Feet launched in 2012 and feedback was mostly positive, says Kahana. “One blog made a negative comment, but it didn’t stop us,” he adds. Now with such characters as Kate Middle-Toe, Prof Brian Sox, Andy Sock-Hole, they sell socks in 27 designs in nine countries. “Last year we doubled our unit sales and we’re currently looking to open up new overseas markets,” Kahana reveals.

When seeking feedback, Kahana recommends having a prototype. “Then people can see exactly what you’re talking about. Also carry out research to make sure someone hasn’t already got there. Discussing your ideas with others can be beneficial, but make sure you’re in a stimulating environment. You should feel able to express your thoughts. Some people see the world in strict paradigms; they struggle with new ideas. Don’t listen to them,” he advises.

“The Dragons abused me in their typical style – even saying that my product was dangerous. Afterwards I was angry, but determined to show them.”

Buoyant sales

Kevin Moseley was a swimming instructor in Lancashire in the late-1980s. For a fun way to end lessons he would pretend to be a shark and swim around the pool wearing a fin made from two polystyrene kickboards. One day a child asked if he could try the fin, because it looked fun. Moseley experienced his own eureka moment, realising the commercial potential.

“Over some years I created, tested and improved prototypes,” he remembers. “I’d taken out a trade mark and had patents pending when I was invited to appear on Dragons’ Den in 2006. The Dragons abused me in their typical style – even saying that my product was dangerous. Afterwards I was angry, but determined to show them.”

Kevin remortgaged his home, borrowed from the bank, cashed in his life savings and sold his swimming school business to raise start-up capital. “It was a huge gamble, risking everything on an idea seeking to change the way swimming is taught around the world. I could never have been 100 per cent sure it would succeed,’ he confesses.

Moseley modified his product, had it tested rigorously against international safety standards. “I spent 18 months on R&D. You can’t launch a swimming aid without thorough testing – parents must be able to trust your products.” Then he found a manufacturer and launched Northampton-based SwimFin in 2008, running the business from his garage.

“In our first year we sold about 70,000 units in 46 countries overseas – a promising start. Now we export to more than 100 countries, have 44 exclusive international distributors and in the next year we hope to sell our one millionth SwimFin. We have a range of products, but the pioneering SwimFin is still the bestseller. I’m very proud of my idea and the business.”

• Written for The Guardian Small Business Network by Dead Good Content founder, Mark Williams.