Will a business plan ensure the success of my small business? If I don’t need financing, why do I need a business plan? Isn’t it true that most of these plans lie in a desk drawer or filing cabinet, never to see the light of day?
There are basically two goals for a business plan.
The traditional, long with all the details, is used when you need to present it to a potential lender or investor. This should include everything including your marketing plans, operating plans, and financial details.
The other plan is for internal purposes. It’s a shorter document that keeps you and your team aligned with the goal and priorities.
Creating a business plan greatly increases your chances of being successful in your business. Doing this homework for your business requires you to think. For example, do your assumptions make sense?
A comprehensive business plan will help you answer many important questions. You will have to do a lot of research; there is no way around it! But the more variables you consider, the greater your chances of success.
So why isn’t everyone doing this? There are several reasons, the most obvious is that creating a business plan requires a lot of tedious and time consuming work. Maybe you don’t know where to start, or you just don’t understand why a plan is needed in the first place. (Some people can be lazy or complacent, but you can’t!)
Consider an alternative approach
Perhaps you should consider the alternative approach: the Business Model Canvas (BMC). Originally proposed by Alexander Osterwalder in 2008, the Business Model Canvas “is a strategic management model for developing new business models or documenting existing business models. It is a visual chart containing elements that describe a company’s value proposition, infrastructure, customers, and finances. It helps businesses align their businesses by illustrating potential tradeoffs, ”according to Wikipedia.
A BMC offers several advantages for a new business. First, it lets you see the big picture – it’s like the picture on the outside of the 1000 piece jigsaw puzzle. It helps you determine how the pieces fit together.
Then it allows you to be creative in your approach to the market. Do you want to be like everyone else in your industry, or is there an innovative opportunity to be different? You can experiment with different approaches before committing your resources.
Finally, it helps you identify your assumptions – those assumptions and assumptions that you base the business on – so you can test them quickly and inexpensively. You can find out what is really working in the market and what you think might work but not resonate with customers. It helps you explore ways to pivot your business for greater success.
If a typical business plan has 40 or more pages, why does the BMC only have one page? They are two different approaches. Think of BMC as a photograph and a business plan as a written description of the same. A picture is better than a thousand words.
Learn how to rotate
What is the structure of this one page plan? The BMC one-page diagram has nine cells: Customer Segments, Value Proposition, Channels, Relationships, and Revenue Model include the left side of the canvas (the customer side of the business) while the Right side includes key resources, key activities, key partners and cost structure (the “behind the scenes” part of the operation).
What is pivoting? If you ask a successful entrepreneur how their business has evolved, they will almost always tell you that the business started in a direction that didn’t go so well, but something different – often unexpected – worked, and this is how he succeeded. . You do what works. The shift from “what you started doing” to “doing the new something a little different” is called a “pivot”, taken from basketball. You keep one foot planted (in your vision or central idea of who you are) and move the other foot (do something different or something in a different way). It’s a process of learning, growing and changing to find and deliver what customers want.
A quick way to learn more about BMC and how to make your own is to watch a YouTube video called: Business Model Canvas Explained. If you have any questions, please feel free to email me at [email protected] and I’ll try to point you in the right direction.
Dennis Zink is an Exit Strategist, Business Analyst and Consultant, Certified Value Creator and SCORE Mentor, and Past Chapter President of SCORE Manasota. Dennis created and hosts “Been There, Done That! with Dennis Zink, ”a nationally broadcast commercial podcast series and“ SCORE Business TV ”available on Time4Exit.com. Dennis led a SCORE team to create the Exit Strategy Canvas and Exit Strategy Roadmap which provides a real world methodology for achieving corporate equity. Email him at [email protected]
This article originally appeared on the Sarasota Herald-Tribune: DENNIS ZINK: How Does the Business Model Canvas Work?