Dr. Dan Nathanson
Anderson Graduate School of Business UCLA

What is the most important advice you give to your business school students?

The advice I give most of my graduate business students as well as entrepreneurs with whom I work, is don't write the plan in your basement. Get feedback from the market. And the first way you do that is take your idea and talk to your friends and family. See if they go wow or not. If they don't go wow, you know you have a problem. But when you do talk to your friends and family, say look please give me some good feedback on my idea. Ok, because if you don't, I'm liable to spend a fortune and a lot of time chasing something I shouldn't be chasing.

Once you've got a lot of feedback on your basic idea, the next step is to go and test the market it's self. Now that may take creating a prototype or a sample of what you're doing. It's very hard to get market feedback without a particular product or service that you're going to be selling. The people who you are getting the market feedback from, your target market the people you're going to be selling to have to know specifically what that product is. They have to really understand the product or service.

Now why do I say to do all that before you start writing a business plan? You need to know the market well, you need to know the products well, you need to refine it and you need to get it. So really what I am saying is planning before the plan. If you start with an idea and just go directly to a plan, to the strategic plan the business plan, you're going to end up writing it and re-writing it. As it is, it is an iterative process. You go back and forth keeping on changing the plan until you're ready to present it. Then later on you're changing the plan. So it's not a static kind of thing the business plan.

So the first thing I say is do your homework to my students and to my entrepreneurs. Understand, "will the customers buy?" The biggest problem in small businesses and why they fail, and they fail very often, is because there really is no demand for the product. And the entrepreneur has failed to explore that. If just because they like the idea that everybody will like the idea and that could be farther from the truth. Writing a plan its self is not the hardest part, the planning, the understanding is the hardest part.