Bullish: Do You Need a Business Plan to Start a Business? (Hint: No)

Jennifer Dziura writes career and life advice on TheGloss and is headquartered on GetBullish.com.

I am a 27 year old first time woman entrepreneur! So far I am in the beginning idea phase of starting my own small business in San Francisco. I am extremely passionate about educating and providing the public with healthy smoothies and juices. As a long time gluten-free vegan it is my ultimate goal to show the world that doesn’t mean you have to sacrifice taste! I wanted to start a mobile business traveling from parks to office buildings and beyond offering smoothies and juices that lack artificial sugars and promote healthy fruits and veggies among other things! My question to you as someone who has no prior business experience is mainly where and how to start with a business plan? Do you have any good resources you can share with me? Any good advice or tips? Anything at this point is helpful!

Hi there! I have very strong opinions about this!

What people are usually talking about when they talk about a “business plan” is primarily a document for investors. These plans contain financial projections that in many cases are entirely fictional. You don’t need the kind of business plan that business plan consultants are paid for and business plan software helps you create.

Writing a 20-page “plan” for a business that doesn’t yet exist isn’t necessary in your situation.

One reason: Your customers may not be who you think they are.

A lot of vegans like juices and smoothies, but already make these things themselves. Some would be reluctant to buy from a juice and smoothie business because they avoid disposable cups and bottles. And I imagine you’ve noticed that a lot of vegans are less than wealthy, due to the heavy intersection of choosing veganism and pursuing careers as activists and artists. There are, of course, exceptions, as in this articlee about “power vegans” (and the, um, “Skinny Bitch” crew).

But it very well may be that the people willing to pay for juice delivery are boozy, meat-eating ladies who decide to go on a cleanse for their upcoming wedding. Maybe they only want six weeks of juice, but are willing to spend $1,260 on losing 10 pounds. (I got that number, by the way, by multiplying $10, a typical NYC price for BluePrint green juices, by 3 times a day times 7 days times 6 weeks.) Maybe a lady who is a pushy bridezilla would also “encourage” all her bridesmaids to join her on a juice diet! And maybe you can get the same customer back later when she’s trying to lose her baby weight.

Or maybe your products will be really popular with corporate executives who view constant green juices or flax oil concoctions as a secret weapon for boosting their energy and getting the edge on their competitors.

You just don’t really know yet.

Here’s a good example of that, from an article in The Atlantic about Boxed, the “online Costco”:

Like most new businesses, though, the concept isn’t the one it started with. When Huang and his team started Boxed, they thought their most avid buyers would be young, technologically savvy men in cities who would buy things like protein powder and energy bars — but those items barely moved. “It turns out the use case is actually… you’re a mom who would rather spend time with her kids on the weekend than burn a whole afternoon at Costco,” says Huang. As a result, the company’s customers skew heavily female.

Knowing who your buyers are helps you craft your message. For instance, I regularly walk by a dumpy-looking juice bar that has decided to print on its window a menu of what juices are good for what conditions. This window display contains the words “acne” and “diarrhea.” I’m sure the juice is great, but this is not my scene.

In contrast, BluePrint gives fancy names to their juice concoctions and delivers them to busy fancy people, along with juice fast “meal plans.”

Social responsibility note: I do not recommend juice cleanses. I would also add that the idea that you can “cleanse” the inside of your body is no more scientific than the idea that a deity can “cleanse” you of your sins. The human body contains ten times more bacteria than human cells. Also, eyelash mites. We’re full of germs and bugs, oh no!

That said, I’ve been known to drink a BluePrint green juice in addition to a healthy diet, especially if I haven’t been eating enough greens lately. Drinking a BluePrint juice in public sparks conversations with other people who are into juicing and also being fancy ladies. It’s part of an upscale health and fitness lifestyle — you drink your BluePrint juice after your Soulcycle class while wearing your Lululemon pants.

I’m sure the juice sold by both businesses is pretty much the same. It’s juice.

So before you make huge investments and commitments, consider the idea of a Minimum Viable Product, or M.V.P. You can google the shit out of this. Here, for instance:

The minimum viable product (MVP), as defined by Eric Ries, is a learning vehicle. It allows you to test an idea by exposing an early version of your product to the target users and customers, to collect the relevant data, and to learn form it. For instance, to test the viability of using ads as the major revenue source, you could release an early product increment with fake ads, and measure if and how often people click on the them.

As lack of knowledge, uncertainty, and risk are closely related, you can also view the MVP as a risk reduction tool. In the example above, the MVP addresses the risk of developing a product that is not economically viable.

So here’s one plan. Think of your business in phases:

MVP: Launch the minimum viable version of your business.
Research: Find out everything about your customers.
Re-Launch: Change the business name, logo, branding, and message to cater to your most promising group(s) of customers.
Hustle: The (unprofitable) startup phase will likely last a lot longer than you think.

On the research phase:

Not only might you discover that your customers aren’t quite who you expected, you might also decide to change your product line. What if you really want to serve vegans (not the bridezilla lady)? I used to date a (male) vegan who had the constant complaint that vegan food sellers seemed to assume all vegans were women with tiny appetites. As a male vegan who worked out, his caloric requirements were quite high, and since most vegan food is fairly low in calories, he really needed substantially larger portions of food than non-vegans would typically eat. And yet we could, without fail, go to an Italian restaurant, where I would order a dish off the menu and he would make a special order for pasta with vegetables. We would usually be served each others’ meals and have to switch them around. And inevitably, my cream-filled calorie bomb was double the size of his ascetic portion of pasta and broccoli. There may be a market of VERY HUNGRY male vegans out there. If they’re anywhere, they’ve got to be in San Francisco!

Decide right now what’s more important: selling juice and smoothies and educating people as per your current vision, or building a thriving business in whatever way people want (that doesn’t violate your values). Decide now or you will constantly stall because you are torn between your original vision and meeting the demands of the market.

Do not tie your business too closely to your personal identity. Do not become this lady, OMG.

On the hustling phase:

It will probably take you twice as long as you think to be profitable. It will probably take a long time to earn back your startup expenses. Do not plan to live off your business anytime soon.

Many small businesspeople begin with great optimism and with inventive plans to make things really special for their customers — every coffee at our coffee shop comes with a cake bite; every student at our study academy gets our logo notebook and pen; our spa has a really good espresso machine and we’re going to serve everyone espresso beverages. And then six months go by and the business isn’t profitable yet. The business owner is bleeding money and makes EXACTLY THE WRONG DECISION — no more cake bites; we’re hoarding the notebooks and pens for the students who sign up for the whole semester; we’re switching to powdered nondairy creamer. Fearful small business owners regress into a self-protective, petty cheapness that destroys the special qualities that could ultimately allow the business to succeed. They pull back when they should (dare I say) lean in.

The way you avoid this is to have realistic expectations about profitability. What if it took two years for your business to be profitable? Can you pay your bills some other way? Can you stick it out? Can you treat your customers like royalty while feeling hurt and bitter that you put so much of yourself into this and people just don’t appreciate it?

Please talk to other business owners with similar business ideas. Maybe there’s someone who also delivers food, but such a different kind of food (Dairy on call! Snowcones at birthday parties!) that this person wouldn’t consider you a competitor. Ask how long it took them to be profitable. Consider the fact that some people will lie or exaggerate to make themselves look good.

And finally, some practical suggestions:

Could you fund your startup via Indiegogo? Kickstarter doesn’t allow business startups, although many businesses get around this by launching a “project,” such as a specific product, fashion line, etc. Check out the different crowdfunding sites and see which one would work best for you.

A crowdfunding campaign would allow potential customers in your local area to buy, for instance, a $100 package that gets them, say, $175 worth of juice deliveries during your opening month. You could create something like an e-book of smoothie recipes as a reward for non-local backers. And ethical vegans all over the US might kick in for ideological reasons. At the $5 contribution level, it’s pretty common that the reward is simply a “thank you,” and perhaps a link in a blog post thanking your backers.

I once did some marketing for a tiny whole food co-op. Many wealthy liberals (I’m assuming) paid $20/year for membership and yet never set foot in the store. They just liked the idea of supporting a whole food co-op.

Here’s one startup expense: you will need insurance. Every once in awhile, someone gets botulism from the blueberries, or listeria from the cantaloupe. Fruit is all very natural and healthy, but, you know … listeria is also a part of nature. Certainly you are not the first person to sell fresh fruit, so undoubtedly there are many regulations already in place for you to follow. You may also have trouble buying insurance for a business involving delivery. Sometimes business insurers want to physically visit a place of work, and if you can’t provide that, it gets tricky. I have typically paid $250-350 a year for business insurance for an office-based business, whereas a policy I bought for a business that provides seminars in a variety of (safe, professional) locations was $2,500 a year. So I’d start contacting business insurance companies right away.

A lot of people who order food delivery don’t really care where it comes from — they’re ordering because they want to expend as little effort as possible. I looked into a food-delivery business idea myself not long ago, and discovered that you can indeed list a catering service (or a delivery business that lacks a physical restaurant) on Seamless and Grubhub.

Where are you going to physically make your products? In New York, it is generally illegal to make food at home and sell it to the public. There are exceptions for certain categories of food, like jams and jellies, for which you have to open your home kitchen to inspection, install a door to keep out pets, and fulfill various other requirements.

But one of the benefits of living in a big city is that there are enough people with food startups that it is easy to find a commercial kitchen where you simply pay for a shift. There are quite a few of these in New York! A baking business might have a midnight to 6am shift every day, whereas a salsa business might only need one big shift every few weeks to make batches of salsa. I’m sure you can find something similar in your city. It’s also almost certainly legal to make an arrangement with a licensed food business to use their kitchen space, even if you’re literally just juicing fruits and vegetables in a nook in the back of a local Chinese takeout place.

Earlier I suggested trying to talk to people who run similar businesses. There are also organizations like SCORE, which provide free mentoring. And any kind of business help related to obeying the law, getting permits, paying for licenses, etc. should be free — every city has some kind of small business commission for precisely this purpose. If you visit the city’s small business commission and ask about something like starting a web design business in your home, you will likely be told to pay for a business license and that’s it. But if you visit asking for advice about one of the more regulated categories of businesses, such as food, you should receive exactly the information you need.

Good luck!

Send in your questions to jen@getbullish.com or follow on Facebook or Twitter @getbullish. Check out the 2013 Bullish Conference here.