Five Year Plans: Horseshit. Two Reasons Why
I received some feedback recently on a pitch session, and one of the comments was “Where do you see this business in 5 years? Do you see the data side or the bidding side as winning?”
This is what I said: “I don’t know for sure. That’s pretty far out there, and everything I say or write down on a plan will be a wild-ass guess at best.”
This is what I was thinking: “Shit, I have no fucking idea where things will be in 5 years. The building we are in might not exist, I might be dead, our app might not exist, some other technology might take over, we might have hit something big and have grown beyond this traffic ticket stuff, I may have moved onto something more interesting in another city, or a competitor may have already bought us out by then.”
Just because someone has had success with written five-year guesses….er plans, doesn’t mean that its something you should actually do yourself. There are just as many successful people that contradict the above and say you don’t need any plan beyond 12 months, or any plan at all. Like Jason Fried, I fall into the latter category, and here’s two reasons why:
1) In 2010, could you have predicted that you would be doing exactly what you are doing today?
I didn’t think so. Neither could Research in Motion or SnapChat. So what makes you believe that you will be able to predict—with some level of precision—where you will be 5 years from today? You can’t, period.
2) No one ever predicts that their business will be unprofitable or dead in 5 years
Have you ever seen anyone predict that their business is going to be losing money five years from now, have negative growth curves, or out of business? No. Never. What you will see is essentially the same for everyone: a very rosy picture, with huge revenue growth and margins in 5 years, everything running like clockwork, hockey-puck growth curves, and maybe even a successful exit. Yea, all a load of crap. Most of those plans don’t even pass the giggle test. So why bother putting together such horseshit?
It’s not about the plan, its about how you think
When someone asks you to create a 5-year plan, it’s mostly so that they can gauge how big your dreams are and whether you can create a credible budget and plan given some assumptions and realities. It’s about the outsider who is vetting you…giving them yet another data point to gauge whether you are worth their investment in time and money. That’s all it is.
Just do a 12-month guess, and adjust it as needed every 3 months
Don’t bother with 5-year guesses. At best, it’s a waste of time. At worst, it’s a tool that can hurt you by making you believe in your own press.
Instead, create a plan/guess going out 12 months, and adjust it periodically. Anything beyond 12 months is, well, you know what it is.