Forget a business plan!
Wait, I thought planning was important? Of course you still need to plan - but not in the antiquated framework the Boomers of our society are so versed with. As many poignant thinkers in business strategy have highlighted, the traditional get-a-loan-from-a-bank-manager type of business plan is a widely outdated concept. Particularly in the context, of innovative startups working with technology and operating in great uncertainty. So, unless you are planning to launch a product line of wax polish for church furniture, reconsider if a lengthy 10-page plan is the best approach.
Why are business plans outdated?
The fact is that today’s economy is far more unpredictable than in times past. Globalisation, technology and online marketplaces have revolutionised the way we market and trade products. You simply can’t create a 3-year financial forecast to predict the sales of your x-ray glasses, when you aren’t even sure who your customers are. Granted, this theory applies more so for disruptive technologies or companies with uncertain product/market fit. Traditional business plans are built around a notion of security for investors, but I hope that you are building something with less certainty and more innovation!
While a number of contemporary alternatives exist, a template which commonly stands out amongst the business development community is the Business Model Canvas. First proposed by A. Osterwalder in 2005, it has since been adopted by many companies worldwide. This one-pager provides a great way to visually strategize the core elements of your business. Not only is it valuable for yourself and your team, but its great way to share your strategy with external stakeholders too. Under the CC license, I am sharing the template for download below:
How to use the Business Model Canvas
Fortunately, the beauty lies in its simplicity and the canvas is pretty self-explanatory. It’s composed of 9 elements, each representing a core element of your business. It’s your responsibility to evaluate each element and supply data to it, using the ques provided in the template. They include:
Value proposition – What value do we provide to the customer?
Key resources - What key resources do our value propositions require?
Key partners – Who are our key partners?
Key activities - What key activities do our value propositions require
Customer segments – For whom are we creating value?
Customer relationships – What type of relationships are we expected to maintain?
Channels – Through which channels do our customers want to be reached
Revenue streams – For what value are our customers really willing to pat
Cost structure – What are the most important costs inherent to our business model?
Hopefully now, you understand the value in taking a more agile approach to your business plan. Not only does it deliver a better framework and keep your team aligned, but it’s also far less work to create. Bonus! The key thing to remember is that the BMC is a ‘live’ document; meaning you should regularly revisit and update the various functions as your business and strategy evolve.