Burn Your Business Plan
There was a time when business plans were anything from 75 to 100 pages but today 10 to 15 can be considered too long. If you’re hungry for your piece of the business pie but don’t exactly want to spend a couple months playing hit and miss with investors and potential customers then a one page business plan could be the answer you’ve been looking for.
Being able to simplify your business concept is a useful skill to have and it was Alexander Osterwalder and Eric Reis who decided that we should stop taking the long way around when it comes to business plans and product development.
“Founders go wrong when they start to believe their business plan will materialize as written. I advise entrepreneurs to burn their business plan – it’s simply too dangerous to the health of your business.” Alexander Osterwalder
The New Business Model Canvas Approach
Osterwalder created a model consisting of nine building blocks, which once put together give you an overall picture of your strengths, weaknesses and how your business functions. It can be used in your business plan as well as assist you with strategy and innovation in the future. It consists of the following parts:
- Customer Segments: Who are your mass and niche markets?
- Value Proposition: What are you offering and why are you different?
- Channels: Look at the phases your product goes through. This is everything from awareness and distribution to after-sales service.
- Customer Relationships: How are you building relationships with customers and is it working?
- Revenue Streams: Look at what you are charging and if you could be charging more. How are you receiving your payments and does it contribute enough to overall revenue?
- Key Resources: What resources do you require to function? These can include physical, human, financial and intellectual.
- Key Activities: Ask yourself what activities need to take place in order to deliver on your value proposition?
- Key Partnerships: Write down who your key suppliers and partners are and how they contribute to your overall goals.
- Cost Structure: Look at fixed and variable costs so that you can see what can be improved upon.
The Lean Start-up
Three years after the business model canvas was developed, Eric Reis introduced the learn start-up concept and again, many were hesitant to try it out. However, after it proved successful time and time again it fast became a logical way to develop products in our ever-evolving and demanding society.
“Don’t be in a rush to get big, be in a rush to have a great product.” – Eric Reis
The idea behind the lean start-up is that instead of spending months developing a product/ business concept only for customers to reject it, entrepreneurs should instead focus on experimentation, innovation and feedback. The lean start-up simplifies the early stages of entrepreneurship by eliminating long development times and the need for large amounts of funding and instead building companies and launching products a lot quicker.
“The same products, services or technologies can fail or succeed depending on the business model you choose. Exploring the possibilities is critical to finding a successful business model. Settling on first ideas risks the possibility of missing potential that can only be discovered by prototyping and testing different alternatives.” Alexander Osterwalder
The below video will give you a good idea of what the lean startup is all about.
Why Experts are Advocating a One Page Business Plan
With simpler, to-the-point methods becoming the norm, many entrepreneurs have turned to 1 page business plans in order to get their businesses off the ground faster instead of opting for a detailed and time consuming approach. In case you had any doubts, here are the advantages of a one page business plan:
- Since your ideas are changing all of the time, it’s easy to update
- It provides clarity to whoever is reading it as important information sticks out
- It’s a good way to generate interest around a business concept
- It will assist you with your pitch
- It offers a more affordable approach to product testing and development
- It helps get your entire team onboard with the company vision and goals
- With the plan having very specific goals you can create a straight forward strategy around each of them
- It eliminates the need to find an excuse not to plan and grow
“Once you understand business models you can then start prototyping business models just like you prototype products.” Alexander Osterwalder
How to Prepare a One-page Business Plan
There are many different ways to structure a 1 page business plan but the most common/effective sections to include are:
- Vision. Your vision should get you fired up and be short and to the point. Talk briefly about what you are building.
- Mission Statement. Your mission statement will describe what you do, what your product/service is and who your customers are.
- Objectives. Next you can jot down your business goals for the next week, month or year. Try and keep it down to a few bullet points.
- Strategies. Provide some insight into how you plan to achieve your objectives. Again, find the best way to summarise these points using short sentences.
- Action Plan. Explain the steps you will take to action your strategies and remember to add dates to these items to give yourself a deadline. Stick to bullet points in this section too.
Test-drive Your Business Plan Hypotheses
Now that you have your one page business plan, here are three simple ways that you can use it:
- Use this simplified plan to pitch investors. It goes hand in hand with your elevator pitch.
- Test drive your thinking. Get out in front of as many potential clients, partners and suppliers as possible. In presenting and discussing your offering with them you will receive immediate feedback. This kind of first-hand market research will be invaluable as an early indicator as to whether or not your business plan is on track to becoming a profitable enterprise.
- Review your plan on a monthly basis to see if you are still on track and revise if need be. It’s also easy to change things up if you decide a certain product or process is no longer relevant to or working for your business.
- Share the business plan with your management team so that you’re all working towards the same goals
- If you are pitching a government institution or bank, a 1 page business plan won’t be appropriate. Also, find out more about the investor you are pitching to make sure that they don’t prefer more detail in a plan
- Stick to key words and short phrases
- Just because this is a shorter version of your business plan, doesn’t mean you shouldn’t do enough research to validate your objectives and strategies. You need to be able to answer any questions about your idea, your market and your finances.
- Pair your one page plan with your business model canvas to give investors and your team a better idea of how the business will work
- Use the one page plan to build yourself and your team a to-do list
- Consider the lean start-up model if you are developing a new product or service offering and are unsure about whether it’s what your customers are looking for