nah. we never had a business plan and are still going strong 11 years later. 99.999% is a gross exaggeration of reality.
we’ll never actually have this data, but I bet there isn’t much correlation if any between having a business plan and being successful.
have you started a successful business?
I suspect you did actually have a business plan, even if it was informal & just in your head. Something like "based on my experience in this line of work, I can charge about $X for Y service, if I get Z sales at that price, it's a viable business, otherwise I'll try to do ABC instead." It's light on details, but that's still a business plan, you had a plan to bring income in. That's fine.
Not having a business plan looks like "we'll release a free thing, have no way to generate income, lose money for a few years, and then beg for a million dollars." That's not a business plan. That's a waste of your time & your users' time.
> have you started a successful business?
Not yet, but I am actually working on it! Having a meeting with a local business tomorrow to discuss potential market pricing options so I have some idea of how much money I can expect to make. Business plan!
> "we'll release a free thing, have no way to generate income, lose money for a few years, and then beg for a million dollars." That's not a business plan. That's a waste of your time & your users' time.
This is literally the foundation story of numerous billion-dollar businesses. In fact OpenAI managed to beg their way into a trillion dollars after losing money offering no kind of product for many years. It sounds like it's just a business plan that you don't like very much.
Off the top of my head, I believe Twitter, Youtube, Discord, Reddit, Imgur each had no monetization at all for the first 3~5 years of their existence. Or more recently there was uv, that write-it-in-Rust Python package manager that had no avenue for monetization but received millions in investment funding a team working on it full-time until successfully getting bought out by OpenAI.
> I believe Twitter, Youtube, Discord, Reddit, Imgur each had no monetization at all for the first 3~5 years of their existence
yes, their business plans was always to engage a lot of users losing VC money until you are a platform with enough moat to add monetization. It was the plan all along
It is the plan for plenty of startups: when it works you become a tech giant, otherwise you fail and no one knows you
Those are actually all pretty good examples of what I'm talking about, yeah. Investment money is not income, it is debt. It has to be paid back some time, or else your business will close. So the users who came to depend on the business will get boned when the business either closes or drastically changes as they find a business model.
OpenAI, for example, is not profitable as far as I know. I think the users they have now will be in for a rude awakening once they have to come up with a business model in order to pay back their investors. Startups that don't have a business model and get bought also regularly get shut down shortly later, leaving users stranded, look at Nest or Keybase for example off the top of my head.
Investment money is not debt. Equity and debt are different things.
For my master thesis I did a lot of digging into the research on success factors for startups. And at least based on what I found back then, you're right. The correlation is weak between any factor like this and success. Generally positive though, so it does make sense to try doing some planning. But it's definitely not a requirement.
In general, observable factors doesn't strongly correlate with success. Probably both because there are so many to choose from and because the real world is complex and typically doesn't align well with any predefined plan.
This kind of analysis sounds far more interesting than a lot of the "just do what I did!" startup writing that's out there. Do you have any recommendations for further reading from this perspective?
I’m not speaking from the startup world, but the sheer amount of small businesses that don’t do any level of revenue forecasting, financial modeling, or even formal budgeting and still make a comfortable sum (~$10m assets over the course of 10 years) based on instinct is pretty staggering. Personally it seems more stressful but that’s the leeway experience gets you.
It took Uber, like, 14 years to become profitable. That doesn't mean Uber is necessarily a success, though. They could still disappear.
There's a lot of corpse businesses around. The walking dead, just operating with zero profit and no realistic plan to be profitable. Their investors are usually just stupid or they think they can eventually squeeze the market so severely they can't go out of business.