True Story: Business Plan Addict

Yesterday I posted my slogging it out theory, how business is sometimes a matter of doing the work, getting the store open, returning the phone calls. That post reminded me of someone I worked with who did just the opposite.

I haven’t seen Ralph (not his real name) for several years now. Rumor has it that he finally did get a company going, sales of a few million a year, and then fought with the programmer whose work got them started, and fell from grace.Gambling_business_planistock_000000

Ralph was a serial non-entrepreneur. We worked together off and on for about six years and during that time he was never not working on a business plan. He was going to get financed. "Business Plan" to him wasn’t just planning a business, it was a lottery ticket to a carpeted office and big BMW and somebody else answering the phone and making the coffee. He spent years working on one business plan after another, none of which ever got financed. He was a business plan addict, living on the dream of hitting it big, always looking for the big win, but never actually taking small steps in the right direction. Nothing could happen until he "got financed."

Like the gambler that never leaves Las Vegas, Ralph was always hoping that the next one would be the big one.

That phenomenon is the main reason for this post. My slogging it out post yesterday reminded me of Ralph’s way of not slogging it out, using the business plan as a reason to not do anything. My wife always said he didn’t do anything, he just talked about it, and dreamt about it. 

On the other hand, Ralph was 10 years older and had more industry experience, so he did some mentoring. For example, at one point we worked up a  business plan for assembling generic business computers in Mexico City (that may sound random, but I had lived there for 10 years and was returning to live there again). He was to be my partner in the Silicon Valley, and I was going to build the business in Mexico. As part of that plan, he taught me, step by step, how to build my own computer. Do you remember the S-100 bus and the CP/M operating system? I built my own.

His best advice for me was extremely valuable: "Sell boxes, not hours." Ralph liked pithy entrepreneur-folk wisdom like that.

Unfortunately, he also taught me a lot of what not to do. From what I heard later, Ralph finally did get something going after I had moved to Oregon, and his business had several million dollars of annual sales back when that was a lot of money. We drifted apart so I don’t know for sure, but mutual friends tell me that the propensity for luxury offices and big-company perks hurt a lot as his business turned into one of those Nova-star affairs that crashed and burned fairly quickly. There was also a rumor that the crashing had something to do with questionable legal moves that were unfair to a partner who had done the programming to get them started.   

This true story is in this blog mainly for several actual business points:

  1. If you’re in the startup mode and working on business planning, don’t suspend business life until the plan is done (because it never is) or until you’re financed. If it’s a good idea, get going. Keep working the plan. If you need to get financed, keep at it, but take small steps in the meantime.
     
  2. If you’re working on a startup, take my advice (not Ralph’s) and think about cinder block offices and such in the more economical locations. If your business isn’t about receiving clients or customers, wait for the luxuries until after you have more revenue than costs and expenses.
     
  3. Sorry, this one is so obvious, but as your business rises in the world, make sure you bring along the people who got you there.

-Tim

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