Ep. #555 - Your Plan IS Wrong
In this episode of Startup Hustle, Matt and Matt are back for Part 10 of “How to Start a Tech Company.” The Matts talk about why your business plan is wrong and how you need to accept that it’s wrong in order to move toward success.
Covered In This Episode
Hearing that your business plan is wrong can be disconcerting and discouraging. However, this doesn’t mean that you no longer need one. Knowing and accepting that your business plan is wrong can be the catalyst for your startup’s success.
In Part 10 of the “How to Start a Tech Company” podcast series, the Matts explain why your business plan is wrong. Matt and Matt share why it is so rare for businesses to go according to the plan. They also point out the reasons why business plans fail, and how entrepreneurs can use these experiences to scale up their businesses.
Hear exactly why your business plan is wrong in this Startup Hustle episode.
- Everybody knows that the plan is wrong (1:32)
- Everybody has a plan until they get punched in the face (2:24)
- Common errors that go wrong with business plans (7:52)
- Defining your target market and over-hype (10:28)
- Focus on the things that matter (16:58)
- Inconsistencies and their effect on the plan execution (26:06)
- Be the wild card (29:05)
- Focus on the benefits of your product and service (34:57)
- The “Oh Shit” list (35:52)
- How much of your original business plan was accurate? (43:50)
- Founder’s Freestyle (45:00)
- Wrapping up (47:44)
You know, when it comes to preparing for the errors and the things that occur, there are some things you can do to best position your business and the plan. And like they said that the planning phase wasn’t worthless. But when you’re planning, you should be talking about contingencies and different outcomes. And if this occurs, we do this and maybe do this and maybe do that. So you’ve thought about it ahead of time.Matt DeCoursey
I think this is a huge problem. And most entrepreneurs have to accept the fact that they’re gonna start their own business, and they’re not going to make nearly as much money as the cushy job they had in the corporate world.Matt Watson
My recommendation for people is to find a co-founder who knows, find mentors that know, find friends that know, surround themselves with people that can help them not make as many of these mistakes, and bring something to the table like you don’t know what you don’t know. So get some people involved that do know.Matt Watson
When it comes to where, when, and why your plans are wrong, I think it’s timelines. Because when that timeline and the status of it goes minus, meaning you’re behind, it just throws everything else off. It ruins your financial projections. It just messes everything up.Matt DeCoursey
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Following is an auto-generated text transcript of this episode. Apologies for any errors!
Matt DeCoursey 0:00
And we’re back. Back for another episode of Startup Hustle. Matt DeCoursey here with Matt Watson. I’m at what’s going on? It’s part 10 of 10. Not part 10 of 52. Excuse me.
Matt Watson 0:14
It’s hard. It’s hard to believe we’ve made it. We’ve made it 10. Like our plan to do 52 is on track. We are doing it.
Matt DeCoursey 0:20
Yeah. And I know and, and the plan has actually stayed on track. What are we talking about? If you haven’t been listening, I, meaning Matt Watson and Matt DeCoursey, are Startup Hustle, Jr. 52-part series about how to start a tech company. Much like many companies, this series is still in its infancy. And we have made it through the planning phase. But today, we’re going to talk about why your plan is wrong. It’s fair.
Matt Watson 0:55
The plan is never correct.
Matt DeCoursey 0:57
Yeah, and we just talked about some business planning tips. But I’m gonna we’re gonna delve a little further in to try to help you avoid some issues and errors that are associated with your planning in general. Before we do that, here is a quick reminder that today’s episode of Startup Hustle is brought to you by FullScale.io. Helping you build a software team quickly and affordably. We can help you keep your plan and budget, or at least mostly.
Matt Watson 1:29
And that is not okay. That’s all right.
Matt DeCoursey 1:32
True, true. True. True. All right. So a couple of things here, Matt, you know, as we get moving, you know, we talked about business planning tips and some of these, you know, we don’t have to have this doesn’t have to be a total rehash or recap. But, you know, I think overall, we’ve talked about this so many times that the plan is wrong. And not only should you accept that your investors and other people that are looking at your company, everyone knows the plan is wrong. It doesn’t mean you shouldn’t have a plan. It just means that you need to know that it’s not going to be spot on. So how do you change lanes, pivot, adjust? Do any of that? I mean, what would you like to say to everyone before we dive in?
Matt Watson 2:17
I feel like we have to start this episode with my favorite quote from Mike Tyson. Everybody has a plan until they get punched in the face.
Matt DeCoursey 2:27
Matt Watson 2:28
And as an entrepreneur, you get punched in the face every week or every day by something. So
Matt DeCoursey 2:34
yeah, I couldn’t agree more. And I mean, that’s just the way it goes. So with that plan and getting punched in the face, that means you need to be prepared to react. And, you know, I think when it comes, you know, there’s a few things that you know, why why should why you should expect your plan to be wrong well, cuz no one can see the future, you know, my crystal ball has been broken for years. And you get you get, there’s some things that you can kind of know in advance, but it’s just the on, on determined, you know, the unpredictable, like a global pandemic, or just general shit involving people overall. So, I mean, but really, I think that at the top level, it’s you just don’t know what you don’t know.
Matt Watson 3:25
That is one of my favorite sayings of all time. And it’s like my kids, my son’s 11 He doesn’t know what he doesn’t know. Right? And as an entrepreneur starting out, or a business person starting out if you’ve never owned a business for and never started a business before, you just don’t know what you don’t know. And the list is long. And in reality, there’s a lot of things that none of us will ever know. But it’s even more dangerous when you’re starting a business.
Matt DeCoursey 3:55
Alright, couldn’t agree more. So you know, and in regards to planning it’s really only beneficial when things actually work out the way that their plan other than that, it’s just kind of a it’s a dry run for what you might do and how you might handle it. And I mean, you legitimately can’t possibly plan for every possibility and attempting to do so it was a waste of time. We kind of went through that in the last episode and you know, good old Murphy of Murphy’s Law. Pretty much states that anything if anything can go can go wrong, it probably will and it’ll usually occur at the worst possible time. I have at my age and experience I haven’t I have an appreciation for the wisdom that Murphy’s laws often provide.
Matt Watson 4:43
Well, and if you’re doing anything software related, that’s pretty much a day-to-day thing like shit always breaks for no reason and doesn’t work for no reason. And yeah, that’s just normal course of business.
Matt DeCoursey 4:56
So, usually something dumb like a semi-colon somewhere that somehow manages to bring down your whole entire website and operation. But that’s a whole nother thing. So, alright. So, you know, when it comes to preparing for the errors and the things that occur, you know, there’s some things you can do to best position your business and the plan. And like they said that the planning phase wasn’t worthless. But when you’re planning, you should be talking about contingencies and different outcomes. And if this occurs, we do this and maybe do this and maybe do that. So you’ve thought about it ahead of time. But I mean, as we mentioned, you know, the things that are important is to build a clear vision for the business, you know, right?
Matt Watson 5:39
I mean, that’s the benefit of the plan, right, is to have a vision for how it scales and what we can do, what we can accomplish, who we need to hire, why we need to hire them, you know, how do we scale the business? Just have prepared to make adjustments.
Matt DeCoursey 5:54
You bet. But vision at the eye doctor, when you’re reading the eye chart and vision for your business are two different things. One is tangible and writes in front of you. The other is just kind of like, I mean, honestly, because it hasn’t happened yet. It’s still a fantasy in many regards. And, you know, there’s so many things, you know, there’s certain tools like, you know, SWOT and, you know, come visit the Startup Hustle YouTube channel, I did a whole video on SWOT and how to create one and, you know, overall, I mean, hopefully you’ve set realistic goals, because if you haven’t, then your plans even more off than then it could have been and I think the next thing is like timeframes. You know, I think that’s where most of the planning fails. I mean, what are a couple other top level ones and then we’ve got a whole list of some of the common errors that we hope to help you avoid.
Matt Watson 6:50
Well, for sure you talk about timeframes is you pretty much have to bet everything is going to take twice as long as you think and cost like three times more than you think that’s that’s for sure. And partly, you can think Murphy’s Law for that.
Matt DeCoursey 7:04
True, true so you know, overall hopefully the plan that you created after listening to the last episode because you hurried up and got it done. So you’d be prepared to know why most of it was wrong for this episode. Hopefully it’s logical, rational and conservative, you know, as much of a of a riverboat gambler as I can be on Sunday as as an entrepreneur and we all are because you’re pushing your chips out at the same time, there’s, you need to keep some dry powder off to the side. And you need to be able to maneuver and make changes and periodically review the plan. So
Matt Watson 7:40
So my plan looks like hockey stick growth. Is that considered logical, rational and conservative?
Matt DeCoursey 7:46
My my plan just looks like a wall because it just went straight to the moon. Ah, there’s not even a curve. And it’s literally like a right angle. Yeah,
Matt Watson 7:56
mine seems conservative now. So that’s good.
Matt DeCoursey 7:59
Yeah, yeah. And yeah, that’s usually the case. But you know, so what are we talking about with hockey sticks and right angles and stuff like that. It’s your growth trajectory. And that’s really where, I mean, when it comes to the overall, why your plans wrong is usually you know, and we’ve talked about this before you enter a business and start a business and it’s so exciting. It’s, I mean, it’s one of the, the, for me, I look back at some of the most fun that I’ve had, professionally doing a lot of different things, but that that level of optimism and hope isn’t isn’t necessarily realistic. And it often leads to unrealistic projections, which really kind of throw a wrench and everything or, you know, put create problems down the road, meaning those those problems with unrealistic projections is if your plan relies on that growth, and it doesn’t occur, or it’s unrealistic, and it’s timeframe, and it’s volume or anything. Now, all of a sudden, there’s like 10 Other things that were dependent on those numbers that are now also not healthy. Yep. Yep. So I don’t know, man, it’s can I’ve learned that lesson, like five different times, how about you?
Matt Watson 9:18
Well, projections are always wrong. Every time I’ve ever done any kind of budgeting and projections, it’s, it’s just always wrong. And you really have to do you know, a sort of what the goal is kind of a an upper upper scenario and a lower scenario. And usually you’re gonna hit that lower scenario, right? I mean, that’s just usually the way it works.
Matt DeCoursey 9:41
So you know, and we’re gonna I guess I got a pretty big list of some of the common errors and things that that go wrong and once again, um, you know, like, this isn’t intended to be Debbie Downer stuff. This is we want you to think about this and give consideration to it and how it affects your plan. And you know, overall, one, you know, one thing that can Have it taught me was the importance of contingency planning. I mean, I will say it was about a year ago that that started. And you know, we had to create about a dozen different scenarios, and then four or five of them became real possibilities. And that’s an example in my opinion of effective planning, as opposed to just having one. And you’re like, if everything doesn’t go perfect here, you’re not doing well. So alright, so back to some of the common errors. You know, plans often have undefined target markets. And we’ve talked about this a lot and defining tam or total addressable market, because and I always throw myself under the bus. So when I started Giga buck, I was like, Oh, my God, anybody could use this, anybody could use it. And then I sat down to try to sell it. And I was like, Oh, shit, anybody could use this. And I hadn’t adequately defined the target market, like I’m talking razor sharp. And just if you think you have this giant, a total addressable market, that’s probably a weakness and not a strength, I think that means you need to get back to the drawing board and really narrow it down. Because when you start to market sell, and promote your stuff, like who are you targeting it to? Like, because you don’t have Super Bowl ad money? Because that’s the kind of stuff that’s just like, a broad range. You know, it’s like, Hey, anybody could use this, but that’s really expensive and often not effective.
Matt Watson 11:27
Yeah, and this is one of the biggest things I think, is the not knowing who your target audience is. And trying to target everybody would be no different than opening a restaurant and saying, Okay, we’re gonna sell hamburgers, Chinese food, and Mexican food and vegan food. We’re going to service everybody and ice cream.
Matt DeCoursey 11:46
And to go bags of candy.
Matt Watson 11:48
Yeah, like, nobody’s gonna come to your restaurant, like, No, you pick something and be really good at it. Like, nobody’s gonna understand, like, why would I go there? That’s weird. So you got to you’ve got to define your market to a smaller scope and be really good at it.
Matt DeCoursey 12:02
And I think that that can even be like, like, hyper targeted. Yeah. Oh, like, right debt, like, who are the three most likely Who Who are the three businesses, people, buyers, whomever that benefit the most, from whatever it is you do, whether it’s a service or product that benefit the most, and then also, I’ll give you a little twist, and are likely to tell other people about it. Yes, yep. Yep. Okay. Because that, that it leads into the next thing is often our plans will the plan itself, it’s often overhyped. Yeah. Right? Like, and the problem is, is when you’re selling a vision, and that vision immediately turns to shit. It’s hard to have believers.
Matt Watson 12:52
Yeah, a lot of times entrepreneurs, especially when they’re fundraising, overhype, everything, like everybody needs this, everybody’s gonna buy this, we just need to create this thing and like, people are going to beat down our door. It’s the most amazing revolutionary thing that’s ever been created in the history of the planet. And then nobody buys it.
Matt DeCoursey 13:09
We have no competition. We have all upside. We’ll have this massive market share by six months from now, but we haven’t built anything, you know, but the overhype part and like so overhyped can go now look, I’m all for hype. I’m not you know, I love my hype right and, and I’m a bit of a hype beast myself, like I love creating it, but you have to be a little careful with it. Because like I said, if you overhype, what you’re doing your plan to your to your team, to your investors, to your clients, and then you don’t deliver it can really like it’s it’s a house of cards, things can really begin to fall on you. And look, you need to build something big. You need to have believers you need to have angels around you that do more than just write checks. And so overhyping certain parts of your plan can can be a little dangerous. And, you know, I like to say don’t sacrifice the long term on the altar of the immediate. I think a lot of founders do that in the fundraising process, and then they find themselves without future support.
Matt Watson 14:16
Yep. You overhype things, and then nobody believes you anymore.
Matt DeCoursey 14:23
Next on the list, how good is your research? Like? Matt, we’ve talked about this so many times, how many times has someone asked you to be involved give you advice or invest in their business? And they’re like, Yeah, and I have like no competition. And then it takes you like, two minutes to not only prove that wrong, but find a list.
Matt Watson 14:44
Yeah, that happens a lot and or they don’t understand the target market that they’re trying to even target like they just don’t understand the industry, or how they buy stuff and how to how to reach those people. Like you got to understand And the whole the whole marketplace and the go-to-market strategy, like, you gotta understand every step of it, you can’t just be like, I’m gonna build this thing, and then they’re gonna come like, you got to know how to reach them and confirm all of that.
Matt DeCoursey 15:12
Yeah, and just because you have a solution doesn’t mean that it has a high level of value for other people. And if you’re entering something, you know, we’ve talked about this as well in the past, but if you’re entering, if part of your acquisition and growth strategy is to acquire customers that currently use something else, your product had better be a hell of a lot better than what you’re hoping for people to switch away from. Because it’s a lot harder to pull users out of other people’s platforms than a lot of people think about, you know, they’re like, oh, yeah, I’m going to, we’re going to take all the users away from company X, Y, and Z, you better be about three times better, or three times cheaper to maybe have a shot of that, if you’re only like 50% better, or even just a little bit, they won’t care.
Matt Watson 16:00
I don’t have time to mess with it. Any worthwhile effort.
Matt DeCoursey 16:06
So Matt, as you’ve built multiple successful companies, and you know, Matt doesn’t like to say this himself that, you know, dude sold his first company for 150 million bucks. So man on a lot of days, I just don’t know what you’re talking about. Whether you do or not, I just give you the benefit of the doubt there. But as you let so you exit one company and you go to start another one. What should your weaknesses ignore?
Matt Watson 16:33
Hmm. I think part of it is understanding your own personal weaknesses, too. It’s like what am I good at? Do I need a co founder to help do this thing? I think understanding those is important. And you like the example earlier about overhyping? Like you don’t want to have a team that overhype everything, but doesn’t know how to actually build the real solution. Like you’ve got to have the right team.
Matt DeCoursey 16:58
Yeah, for me, it’s its focus. Now, again, I’ve moved them around a lot, you know, but you know, 10 years, you 10 different things. And, you know, you talk about the backpack, and if you want to get to the top of the mountain, the more shit you throw in that backpack, the more you got to carry up to the top. And I mean, it’s not that I’m afraid to do it, I’ll say that to my wife, I’ll say, you know, say I’m not wanting to do anything. She’s like, Well, what about Startup Hustle TV? Well, that’s, that’s in alignment, that’s part of our marketing plan. And some of the other things we do, it’s not like, I went and started another startup, you know, or created another entity or needed to go out and raise funds for stuff and you know, like, so really narrow that down. And that’s actually something at Full Scale that we’ve done, you know, we’ve narrowed your plan, shooting should continue to narrow the focus of what you do, and be focal on the things that make the most money. Like, I’ll give you an example. So Full Scale, when the pandemic hit, we really took a look at what kind of tech services we provided. And we we got rid of a few of them. Meaning like it well, a great example is we are no longer seeking new clients that need Salesforce developers. Why? Because we’re having a hard time finding clients for it, and also finding developers, so just don’t focus on it, like, eliminate it. And you know, certain things that you know that I mean, if you’re focused on the wrong stuff, in your plan, or just in general. So it’s easy to write a plan, it’s the writing the plans, the easy part.
Matt Watson 18:39
Well, I think you have two things, you have been focused on the wrong stuff or being focused on too many things, right? It’s both and, and it comes back a little bit to your example, you always talked about the guys opening a restaurant and he spends all his time you know, polishing the floor and never opens a restaurant. And in part of your, your business plan, you got to think about the things to spend all of your energy and focus on like go to market strategy, how to attract customers, all that stuff, not be focusing on other crazy things. So it’s you got to focus on one thing at a time and focus on the things that matter, and people easily get sidetracked.
Matt DeCoursey 19:17
Yeah, and you know, there was a quote from, you know, kind of a self-help business guru, Brian Tracy, the, you know, I’ve carried with me for years, and he likes to say be brilliant on the basics. And if you have a new business, especially a, you know, a new tech company, be brilliant on the basics. And I’ve recently used the example of comparing Gigaba to Calendly. So when I remember when Calendly came out, and we sat there and we were like, we’re kind of making fun of them. We’re like, they only do one thing. And now I look back at it, I’m like, Holy shit, they only do one thing and they do it. Well. And I don’t mind saying that. Because I mean, it’s the it’s a $3 billion company and we were focused on doing, trying to build 10 thing And honestly, we weren’t aces at any one of them for that reason, and that’s the example of, of, of, you know, a frayed focus and things that you need to pay attention to. And that comes, that’s more outside that exists than more than just outside of your plan. Because that focus can be personal, professional and physical. You know, cuz like, you know, shit happens, like you and I have both gone through a divorce at any point was, were you 100% focused on your business during that? Because I wasn’t?
Matt Watson 20:36
No, nope, it’s very distracting.
Matt DeCoursey 20:39
And if you have physical issues, like you’re ill, or something else occurs, or maybe you have some bad lifestyle habits, like, I mean, do you ever go out and get shit faced? And then you wake up and jump out of bed at 8am the next day? And like, yeah, let’s get after it. No, that doesn’t happen. And that’s an example of pulling focus away from the things that matter. And by the way, when I mentioned that, is that a giant box of fireball behind you?
Matt Watson 21:05
It is yeah, it is.
Matt DeCoursey 21:07
Okay, and yeah, we can show that to the live stream. Yeah. This episode of Startup Hustle is not brought to you by fireball liquor. But if you work with or around fireball, we would love to hear your support. Today’s episode of Startup Hustle is however, brought to you by FullScale.io. And Startup Hustle TV. I’m having fun with the TV show, are you?
Matt Watson 21:31
Yeah, it is. It’s fun. The last episode I watched about content creation was really good. Everybody on the show did a really good job. It was it was awesome.
Matt DeCoursey 21:41
We’re getting better at it. So if you didn’t hear the news, we started our own TV show. It’s a it’s a it’s a show about startups and the show as a startup. Because we hadn’t we had basically no idea we we’ve had to pivot about 10 times. But we’re constantly reviewing the plan. And we’re constantly doing things to get better at it. And that’s why the episodes have gotten better. So get come check it out. I spend a lot of fun, man. And it’s also gotten easier, because we have continued to refine the plan. We’re getting rid of the things that we don’t want to do. I’ve one other thing about focused on wrong stuff. So, you know, recently I eliminated about 70% of the marketing activities we were doing at Full Scale. Why? We weren’t getting engagement. So what’s the point? Yep. Right. Like if Why spend time, effort and energy doing things that no one’s paying attention to? So instead, we went back and we looked at what are people paying attention to our blog, our podcast and Startup Hustle TV. So we have began, we began to focus on those things, and realign those resources and help around that, rather than creating a bunch of shit for social media that no one pays attention to or cares about. That’s an example of refocusing and I think you have to do this a lot, Matt, like always ask yourself like, is right now the what I’m doing right now the best use of my time?
Matt Watson 23:10
Yes, it is.
Matt DeCoursey 23:13
It is, this is the best use of your time. Yep. I did. You know, I wrote a book on this. You can bounce me the real estate guy, just successful life. Check it out. That whole the whole premise of that entire book is what is the value of what you’re doing right now? Like, does it move you towards a goal and those need to be personal, professional, physical, I even have a scoring system all of it. You can get you can find it all right. We you know, you were talking earlier about, you know, plans often having a they don’t have a go to market strategy. They have, hey, this is what we’re going to build and this is how these are the features and they never focus on the Fulghum benefits. But really what matters is how are you going to get it out there? What’s your plan for getting people to embrace it? Love it, use it, talk about it?
Matt Watson 24:00
Well, and you and I went through this a few months ago about the internal tool. We built it Full Scale we call Brock’s, right, we’re like, hey, we could sell we could potentially we could raise money and like sell rocks to other companies alike is a really cool thing we built and then we’re like, Who exactly would use this? Who is our target audience? And then like, I don’t know how to how do we reach those people? Like, you know, you have to think through all of those steps before you really have a full business plan. And instead of saying, okay, yeah, let’s go sell this thing. But we don’t even know who exactly or how to reach them. Right? Like you got to have all of all of that as part of the real plan.
Matt DeCoursey 24:39
And some of that was a focus thing too. Why talking about it, like what should we be focused on and this was in the midst of a pandemic. So what Matt’s talking about is it Full Scale. We have created a whole company management system that has multiple environments, it has administration and management. It has an environment for our employees, where they They can go and do a whole lot of stuff, including time clocks reporting and all that clients can go look at the their team members, time clock reports and daily reports. And they can look for news resources, we’ve even built a partner program and a whole lot of stuff in there. And honestly, it’s very marketable. Because right now, a platform that helps you manage your remote development team, I got to think that there’s a lot of people that would have used that. But at the time, and this was July of last year, we’re just trying to get through a frickin pandemic. Now, we focused on that and narrowed our focus. And that’s all like, that’s as the CTO of Full Scale. That’s all I’ve been trying to do for the last six months. That’s right people six months, it literally can, the bigger your company gets, the harder it is to change the direction. So we have 200 employees, it takes a while to roll ship out. So sometimes you got to get started early. But in the case of the go to market strategy, it was just it was there was just too much like it would have distracted our focus from what the business was designed to do, which was sell tech services and help people build teams of developers quickly and affordably. So, okay. Now, people in general are just inconsistent.
Matt Watson 26:12
Matt DeCoursey 26:15
Does, could that have an effect on the execution of your plan?
Matt Watson 26:20
Well, it you know, it’s, the execution being inconsistent is definitely a problem, right? Like, we fire lots of vendors and people that provide services to us all the time, right? They’re inconsistent, like, the people that come to clean my house, like if they don’t show up, or they do a shitty job or whatever, right? Like, they’d be out of here. But how does this relate to a planning, you know, inconsistent planning?
Matt DeCoursey 26:45
Well, so I think you need to assume that your employees, your team, and all of it are going to have levels of inconsistency which are going to affect the execution of the plan. Because, I mean, just like Murphy’s Law, like shit happens, you know, like, I mean, someone gets in a car wreck, or they, God forbid, they have like a sick child, or they go through a personal problem, or things happen, you know, like, I mean, dude, it could be anything like you could, like, there could be a flood and your office gets wiped out. You know, like, I’m just saying, like, there’s, there’s things that can’t be determined, but overall, people are generally inconsistent. So they’re gonna have good weeks, they’re gonna have bad weeks, you look at longer spans, like, you know, and so that inconsistency, in my opinion can have a big effect on the plan. So you have to have some variance in there. You know, I was mentioning earlier, the book balance me, one of the very first interviews I did was with Joel comments from unfreeze McGee, and they’re a rock band, and they have like, and he said one thing to me, he said, You know, when I was talking to him and interviewing him for the book, and this was years ago, he said, the thing that I’ve learned from being a touring artists and doing everything is that you absolutely have to not schedule things too tight, because there’s an inconsistent nature to the way that things occur. And what is if one thing runs a little long, and it’s not consistent, or shorter, whatever it throws the whole rest of the day and everything off. So if your plan is like, super snug and tight, where one thing being five minutes behind, well, that’s gonna make eight other things five minutes behind, which could have a pretty big impact on what you’re doing. And in their case, they’re going to have 1000s of people standing in front of it are sitting in front of a stage. And they get restless in a hurry if you’re not ready to go on. And also like just moving your shit from town to town or whatever. So you know, put little padding and buffers in there that help your plan not fail because it wasn’t seamless, and dude, you have a 0% chance of being a fish in it, any of it in the first couple passes anyway, and we’re just talking about Startup Hustle TV, like we’re so much better at it now than we were in December. Like Yep, dude like light years because we did it we just did. We had to do it and like and also be selfless, like, so I work on some of that and our video editor Johnny, he had a kid he was out for three weeks, I did a lot of the editing because sometimes you have to step in and do that. Now if I hadn’t done that. It would have it would have really thrown off the plan but I created enough coverage now we’re head I can step back out and I can go do other things. So if you’re the CEO and the founder you have to be that wildcard sometimes like Matt Aren’t you the chief bottle washer at sacrifi Yep, and cook and and janitor.
Matt Watson 29:46
I take out the trash. I can fix your broken computer. Can Yeah, yeah.
Matt DeCoursey 29:52
Nice, nice. Okay. So we, we we mentioned that you remember the part where We tell our guests to turn off noisy things. Yes. Yeah, maths bad if out for those of you listening, I just wanted to point out that was him and not me. Because, you know, I actually had my phone rang during a recording the other day and I wanted to punch myself in the face because I’ve had 550 episodes to learn that. So you know, Dax on this less though it is still in the in the vein of inconsistency. If your plan is reliant on people, then it’s really wrong. For the same reason we just mentioned, and sometimes it’s about finding the right ones more so than relying on the ones you have.
Matt Watson 30:39
Well, I think there’s a few ways to look at that. Right? It’s it can be reliant on a business partnership as well, like, everything in our entire business plan is related on this other company selling our stuff, right? Or on person, like, Oh, my buddy is supposed to do so much of this stuff, he’s connections and the people he knows, and he’s our salesperson, and he knows the industry and all this stuff. And then if he flakes out, you’re toast, right? So those Reliance’s are, can can really be a problem for you. And we had this happen to VinSolutions, we thought we had a partner, a partnership with another company that was going to sell our software, we sit around for a year, and it didn’t go anywhere. So that was part of our business plan. It was definitely want to grab.
Matt DeCoursey 31:22
We alluded to this earlier, but that timelines, your timelines are too aggressive. And your plan. Like I mean, that’s that’s so what you just that example, you just mentioned that threw off your old growth timeline, then right? Oh, yeah, for a year. And then that cost you more money because you weren’t making money. And you now look, all you can do is all you can do. So you spent your time and energy focusing on that. We did that a gig a book, too, we had a candidate remember, it was one of the online clothing, places that like set you up with an appointment to talk to a stylist, they send you clothes, you pick what you want, you send the other ones back, we had an opportunity to do business with one of them though, which I will not name and we dedicated all of our time and energy and two months to that. And it didn’t go anywhere. And not only was it we not only did we build a bunch of shit, we didn’t need to build, we didn’t build a bunch of other stuff we should have been building. So that just ended up being a wash. And I mean, not even a wash a loss like that’s red. And that was not only do we spend money on that we didn’t make progress somewhere else, which is a double loss. So it’s not, you know, like the opportunity costs is defined as the value of the forgone option, like what you didn’t choose. And I think that having a strong understanding of opportunity cost. And that concept, and being able to calculate it quickly, is an important plan have is an important part of making your plan actually be effective.
Matt Watson 33:03
Well, the problem with plans if you’re trying to raise capital to or have raised capital, always say, it’s like you’re playing a game of chicken, right, you’re like, I gotta take this money, I’ve got to spend it, I’ve got to prove this. And then three months, now we’re gonna raise this additional money. But if you don’t prove what you were supposed to prove, or you don’t build the product, and you don’t hit those milestones, you hit that brick wall, and you didn’t give yourself enough time. Which gets into our next item in the list about having more margin for error. Right? Like, you know, things are not going to go the way that you plan and your your, your business plan is gonna fail, because you didn’t. You talked about this earlier, like, everything is so tight, like you got to do this perfectly and do this thing perfectly and do this thing perfectly. We’re really almost have to have a plan of like, we’re gonna screw everything up, and nobody’s gonna buy our software, how do we still exist?
Matt DeCoursey 33:51
Right, right. Well, and that’s, you know, and I’m going to combine list items here, but that relying on too many assumptions is, is deadly, because like you mentioned, so, I mean, in that, okay, they if you take the word assume you can make an ass of you and me with those letters, which I didn’t invent that saying that’s been out for a while. But assumptions are very risky, especially in early stage businesses. And we’ve seen this a lot with people we know and that we’ve talked to as they’re assuming that they’re going to raise capital later. Well, that’s that game of chicken you’re talking about. They’re assuming that they’re going to get X number of users x this x that and you know, the thing is, is is too many of the more assumptions you stack on top of other assumptions. Well, you’re building a house of cards again, and that’s, you know, you have to make some assumptions or hopes. But if you have if your plan is built, if it’s relying like what are you like, what assumptions are you relying on because that gets back to shaping your focus? Okay, that’s what you should be focused on. You know, not doing something that doesn’t frickin matter. Alright, so since we’re talking about focus and assumptions like, and I don’t think I can ever say this enough because I hope that the listeners out there, just really, really, really let this sink in. Focus on the benefits of your product and your service. We said that earlier in the episode, I say it all the time. That’s what people buy and that’s what people want. And if you’re doing things that aren’t well, if you’re not hyping them if you’re not explaining them if you’re not selling the benefits if you’re not building things that are directly related to the benefits during the round shad frogs stuff,
Matt Watson 35:40
like like what I told you one day, right, Super Mario doesn’t want flowers he wants to throw fireball wants fireballs he wants. It ends again. It should about the flower wants to throw fireballs?
Matt DeCoursey 35:52
Yeah, that’s so true. Okay. Oh, shit, Matt. I love Oh, shit. All right. So when I write a business plan, I’ve done them for other people. And they’re always like, what is this? I literally put a line in the projections with that’s labeled Oh shit. Oh H space shit. People like what is this? I’m like, that’s your oh shit budget. Like what is that? I’m like, Oh, shit, we didn’t think about needing this. Oh, shit. We didn’t think this would go wrong. Oh, shit, whatever, right? And depending on the business, or whatever I’m planning for I either make it a set amount or a or a percentage of the existing or future revenue assumption. Because Oh, shit is that margin of error? It’s, it’s that it’s a it’s a little bit of padding to bring your shit back down to earth. And l Matt, how often do you have Oh shits all the time?
Matt Watson 36:55
It’s just part of part of it. You know?
Matt DeCoursey 37:00
I mean, no, shit doesn’t go away. And it should be it’s a miscellaneous item, whatever you want to call it that. And then I’ve had people that are like, well, I don’t think I need that. I’m like, okay, because you just said that means you probably should double whatever I put in there.
Matt Watson 37:15
So it’s no different than owning a home and stuff randomly breaks and you’re like, oh, shit, I didn’t have the money to fix the roof, or whatever. It’s no different.
Matt DeCoursey 37:26
They say you can be house poor, you can be business poor too. So Okay. All right. Now. What about paying yourself too much?
Matt Watson 37:36
I think this is a huge problem. And most entrepreneurs have to accept the fact that they’re gonna start their own business, they’re not going to make near as much money and their cushy job they had in the corporate world. And, you know, if you think you’re gonna make, you know, 200 grand a year working for some startup. And in some sense, maybe going and raising capital, partly just to pay your crazy salary, like, is this the work,
Matt DeCoursey 38:06
it’s a big, it’s a big turn off for investors. If like you now it depends on who you are and what you’ve done. But if you’re if you’re Johnny or Jane, startup founder, and you’re not a proven entity, and you haven’t done a bunch of stuff in the past, don’t start don’t start your plant, don’t put yourself as making 10 grand a month in your plan. You know, like, because investors don’t want to just put money in to know that you’re going to be living a fat life. Now look, I am big proponent of paying yourself at your business. I’m not saying you shouldn’t. But also think about when and how. And, you know, there’s a lot of ways talk to your accountant and different people about how you can maximize that because there’s ways you can pay yourself that hat. Well, it’s also the timing of it, you know, like so, there’s a lot to lot to be said there. But you can drain your own coffers for the wrong reason and create taxable income for yourself and your business just by putting money in and then taking it right back out. There’s ways to be smart about that.
Matt Watson 39:14
I have an important question for you. I was gonna ask you before the show, like, do you want to go to Vegas with me for the weekend? And maybe we can expense the jet or whatever? We’ll expense the jet fuel.
Matt DeCoursey 39:25
Yes, I do that. Okay. Yeah, in this case, because we’re going to do real business out there. Right. We have a client in Vegas a big one. A big one. So yeah. But yeah, that’s the kind of stuff we’re talking about is like, I mean, in some cases, you gotta be careful to like because some people start to expense everything. Oh, yeah. And also get scrutinized and you know, like, you know, your your business can should be taking care of the business side of things. You know, and yeah, any Full Scale owns my computer. Okay, that’s what I use it for work. I’m not just like sitting there playing video games. Not all day, just about half a day. But yeah, there’s I mean, so some of it, like I said, you can drain your own bank account, you cannot now, look, the idea of creating your own business for most is financial independence. And that’ll come if you do it right. But don’t kill the golden goose on the way to it. All right. Last on the list before we begin to wrap up is just I think, overall and experience with the real costs of doing business.
Matt Watson 40:37
Yeah, and I, I hit a little bit of this, when I started stack fire, I always remember I, we were building a product. And I was thinking about, I needed some help from marketing. And I had somebody come in, that owned like a marketing agency, and they gave me a bid. I think it was like $10,000 or something. And I just thought that was insane. I’m like, Oh, my God, this is just absolutely crazy. And now looking back, I’m like, that doesn’t seem so crazy now. But when you just don’t have experience with it, you just don’t know.
Matt DeCoursey 41:05
Yeah, and that’s the end. All right, I’ll give you another one. So you and this is directly plan related. A lot of people that don’t have experience, don’t understand or know that when you have employees, you have to pay extra taxes on those employees based on the taxes they pay. And there’s what is often and I think appropriately called a burden rate. That is just taxes and benefits and different things that you like, and I always aim high. So I always take 20% of whatever we’re paying someone and then I that 20% goes on top. And that’s the burden, that the business has a pain, all the other crap. Now, it’s usually lower than that. But I like to overestimate and be in a comfortable range with that. And that’s so you know, here’s the thing is if your plan is tight, and all of a sudden, you realize your Payroll Expense, or your labor expense is now 11% More than you thought it was that might pull a couple months off your runway, that might slow things down for you. And it also might make things a lot more difficult for you. So, you know, that’s one of the most common ones. And then other things, too is, you know, you just like I said it, like we said at the beginning what you don’t know you don’t know. Another those are the real costs.
Matt Watson 42:22
Another perfect example of this is like, yeah, I want to build some mobile app to do whatever and like, how much does it cost to hire somebody to do that? And you’re like, Well, I found a mobile app developer and he wants $150 an hour, you’re like, Okay, here you go. Welcome. Welcome to what it costs to build software, right? Like, your guy. Never mind. I can’t afford to build this app. Yeah.
Matt DeCoursey 42:46
Well, I’ll give you an example. So we have a bunch of employees in the Philippines and we pay 1000s. And as that grew bigger, so did our exchange rate fees, to just send money over and you know, like, that was something that you just helped us address and finding cheaper options for that. But you know, the thing and some of these things, as you scale, they start, okay, like, we pay a couple grand a month for Slack has 200 people on it, you know, and just and now that can scale up with your plan, but you have to add that stuff in. Because if you don’t, and you don’t understand that cost and and you know how that grows. And now all of a sudden, you’re showing your company, that’s another thing with like, Okay, if you’re if your revenue and everything’s going up, you should make your assumptions and your projections should assume that you’re going to need more help to manage it. And that’s where people are flogged, because you know, the plans tight and all sudden, you’re like, holy man, we really need to get someone to manage all the support. But you only have developers in the budget.
Matt Watson 43:52
It’s like it VinSolutions you know, we’re big users of Salesforce, and you get to a point where it’s like, yeah, we had to hire four people just to manage Salesforce. It’s like, holy shit.
Matt DeCoursey 44:03
And then Salesforce is pretty expensive on top. So you’re like, wow, wow. So I mentioned these before, but you know, we had I did a poll and the Startup Hustle, chat and ask our users if you want to join our chat group, there’s a couple 1000 people in there, it’s active and non spammy. So how much of your original business plan was accurate? 28 votes for one to 33% won in a landslide, it had twice as many votes as the people that said 71 to 90% of their plan was correct. 11 votes for the 34 to 70 range. Two votes for 0% of the plan being wrong and zero literally no one said that 90% or more of their original business plan was correct. The people have spoken.
Matt Watson 44:57
Everybody has a plan until they get punched in the face.
Matt DeCoursey 45:00
True. So founders freestyle time, Matt. And once again, today’s episode Startup Hustle is brought to you by FullScale.io. Let us help you build a software team quickly and affordably we are doing business with dozens of tech companies, we have a lot of senior people a lot of awesome stuff. And we have figured out how to help you make your plan a little more effective and affordable. Because we have not only done it for ourselves, we have done it with and for a lot of other people. All right, founders freestyle, Matt, when it comes to plans wrong, what’s that? What are your takeaways? what’s your what’s your, what’s your big uppercut have a punch here, Mike Tyson?
Matt Watson 45:39
I think it all comes back to one of the first things we talked about in the episode. You don’t know what you don’t know. Right. And so literally every every part of your plan of starting a new business as an entrepreneur is a lot of assumptions. And, and you just don’t know how to run a business, how to hire people, how to do marketing, how to do legal stuff, like all these different things, you just don’t know what you don’t know. And my recommendation for people is to find a co founder, who knows, find mentors that know find friends that know, surround yourself with people that can help you help you, you know, not make as many of these mistakes and bring something to the table like you don’t know what you don’t know. So get some people involved that do know.
Matt DeCoursey 46:19
I’m going with timelines. Like I think overall, when it comes to where, when and why your plans wrong, I think, I think it’s timelines. Because when that timeline and the status of it goes minus, meaning, like you’re behind, it just throws everything else off. It ruins your financial projections, it just messes everything up. Like if the timeline when the timeline is grossly out of whack. It just, I mean, every the rest of the plan just becomes futile, you know? So, I mean, think about it, would you rather plan to have things go slow and be realistic? And then and then if it goes better than plan, you’re like, Oh, we’re actually ahead. It was like our sales projections at Full Scale this year. Like we made them realistic, still optimistic. And now we’re about three months ahead on them. So we’re like, Oh, great. We’re ahead of the curve, rather than assuming like, Hey, we’re gonna have to hire 500 new people a month, and do a whole lot of different stuff. So like, I think realism, Trumps optimism, but both are so important.
Matt Watson 47:31
You know, it’s, it’s normal for any company to have a bad month or a bad quarter, right? But if your plan has everything perfect, like, it’s, you have to account for that bad month, that’s gonna happen.
Matt DeCoursey 47:44
I don’t, I got I got one. One thing I want to add on to the end of our episodes, and that’s a little Startup Hustle, TV review. What overall so we at the time of this recording, we’ve published about 10 episodes, and you can find that on YouTube. What’s been what’s been one of your favorite moments of the show so far.
Matt Watson 48:06
Um, I really liked the music that we’re using, I think the music is great, by the way.
Matt DeCoursey 48:15
That’s accomplished salt. By the way, when people tell you that they love the music, the most of all out of your web series. Say thank you, because that’s been by my design, I actually spend a fair amount of time finding the music.
Matt Watson 48:30
So I’m gonna go with the music I liked the music.
Matt DeCoursey 48:33
For I’ve enjoyed watching Eric Perkins work, like, and that’s our home builder cast member, and also I’ve and for me on the behind the scenes thing. I’ve enjoyed getting to know some of these people that we didn’t know that well. You know, we knew at all of them, including our fellow co-hosts, Lauren and Andrew, here on the podcast. And I think I had really when episode 6.0 came out, I was that episode wasn’t intended to be to turn into me mentoring the cast. It just kind of occurred that way. But I love the fact that they were all finding huge amounts of value out of being on the show. For me, that’s been one of the highlights so far. And then the most important one is watching you do perform feats of athleticism on a world-class level.
Matt Watson 49:21
I wasn’t gonna mention it but yeah.
Matt DeCoursey 49:24
It’s, it’s impressive. If you want to watch Watson, it’s amazing. Like you’re almost 40, bro, like how you have you your verticals like at least four or five inches.
Matt Watson 49:37
By the way, are we feeling up to jet tonight? Are we really going to Vegas?
Matt DeCoursey 49:41
Yeah, yeah, I gotta go. I gotta get ready. I’ll see you next time.