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Comment by smanek | Hacker News Reader

A startup without a business plan isn't a business. It's just some code.

I disagree. Users make it a business - and users don't care if I have a business plan. They just care if the product (i.e., code) makes their lives better.

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I mostly agree, though I don't think "business plan" in this context is meant to read "a 100+ page analysis of the market and other bullshit." Rather, I took it to mean a sense of how you're going to get the product out to users and (maybe) how you'll eventually make money. Both of those things are required if you want your business to become sustainable.

smanek's point still stands. If your plan was incorrect and what you THOUGHT was going to make you money, doesn't do so, then you still don't have a business.

However it's much easier to get users if you do have a business plan, or as I prefer to think of it, a business model. If you throw something out there on the internet and start gaining users, you probably have more of a plan (model) than you think.

Having just a good business model can generate sales too though. Actually there's quite an argument for doing so before writing any code. Its a whole lot easier to change some words around on a word document than to completely rewrite an application.

In spite of this being repeated so many times still it is so easy to fall into the trap. At-least it was for me. Working on my latest project we discussed so much on the feature, design and others but never on how to get users. We kinda assumed that once the project is done users will be waiting for us.

A business without a business plan is still a business.

A codebase without users is probably not a business, sure.

But if you have users there is almost always a way to monetize that. Thus, a business. The plan doesn't have to be any more complex than, "Charge for something."

I think there is a third distinction that's missing:

  Idea + Code = Tech
  Tech + Users = Product
  Product + Plan = Business

It's also worth noting that you don't have to make it to step three to have a good M&A exit, as many examples illustrate.

(Good execution at all steps is, of course, implied)

And:

Plan = way to monetize the product + way for users to find out about the product

Maybe this is off-putting because the term business plan has a lot of baggage. However, the point remains valid and correct: you need to have a realistic and executable plan for how to get users. "Build it and they will come" fails way too often.

Smanek, one reason why the failure rate of start-up failure rates are so high is because the founders of the start-up don't have a sustainable business model, or they don't know how to best convey the value proposition to customers and investors. I heard a story about two ladies who sold gift baskets back when it was novel (80s). Initially it was just a hobby, but they turned it into a business because of overwhelming demand. After several years of doing this, working 70 hours week, they looked at their books and realized they were only making 10K profit each per year. Ok? That means they're only making a few bucks an hour. They made a product that people loved, but they didn't make any money.

You need a viable business model if you want your business to succeed.

I think business plan may have not been the right words to use there. Feel free to replace it with "user acquisition strategy" or something like that.

At the end of the day if you're making something that people want, you aught to be able to make money out of it, but it's not as simple as just making something good. Unless you're super lucky/awesome (read: Rapportive http://blog.rapportive.com/the-accidental-launch), you're probably going to have to use significant elbow grease to get users on board.

Steve blanks blog today mentions in passing that a startup is an entity formed to discover a business model, and a business is one that executes on a business plan.

It might make more sense to say a startup without revenue or a monitization plan is just some code. While likely unintentional I think "business plan" trips people up. The idea should def cover how the startup will get users and make money.

I think a "code plan" is the equivalent of a "business plan". Neither have much value. A working product is execution of the code plan. A working business is the execution of the business plan.

When the technical person creates the working product, they have delivered on their side of the bargain. I think the problem is that many non-technical founders think they have made the equivalent contribution by having "a plan". They haven't. They will have made the equivalent contribution when the execute the plan and make money.

On the other hand, a business plan without technology is not a startup either. It's just a hopeful, possibly-better-thought-out-than-normal idea.

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