The (Ir)Relevance of Business Plans for startups


When investors and funders lack ways to accurately assess the potentials and risks of startups, they typically demand business plans. 

I would argue that most business plans in start up contexts are effective ways to assess several things about the character of startups and their founders, including:

  • How well they make assumptions and outline details of how they would go about realizing these assumptions.
  • How well they envision their short term impacts to demonstrate the appearance of being realistic.
  • How well they avoid risks by investing more resources in planning than action.
  • How well they can manipulate data, charts and slides to build a seductive, albeit weakly validated, argument for their assumptions.

I would argue that asking startups to do an Agile Canvas is a far more realistic, reliable and rigorous way to assess the real potentials and risks of a startup and its founders. It gives deep insights into their thinking and attitudes. The Canvas is far more demanding and authentic than any business plan because it is completely based on reality. It also leads to more honest, inspired and productive dialogue between investors/funders and startups.