A comprehensive business plan can be likened to an x-ray result revealing details of all the parts that make up a business, all presented in one piece of documentation. The narrative body of a good business plan will likely cover more than 150 questions divided into several sections covering everything one needs to know about a business. The real value of creating a business plan is not in having the finished document in hand; rather, the value lies in the process of researching and thinking about your business in a systematic way.
If you’re looking to start up a business, then you need a well-detailed plan of action to follow accordingly. If you’re looking to gain attention from investors, or pitch the idea in your head to a venture capitalist (VC), then you need a great and workable business plan. Any person that will believe in you first needs to figure out where your business will be going, how it will tackle any potential difficulties, and what you need to sustain it.
Before you Start
Having a well-written business plan, before you even start building the business is definitely the right thing to do. So start the entire process by first writing down all your ideas, translating them from a mental picture into a written form. But before you get started, take note of these important tips, even if you’re looking to hire an expert to create the business plan for you:
Having a well-written business plan, before you even start building the business is definitely the right thing to do. So start the entire process by first writing down all your ideas, translating them from a mental picture into a written form. But before you get started, take note of these important tips, even if you’re looking to hire an expert to create the business plan for you:
- The business plan should tell a compelling story about your business, with details explaining who you are, what you want to do, when you wish to start, where you will do the business, how you will achieve your aim, and why you’re going into the business.
- The document should be focused and clear.
- The plan should define specific business objectives and goals.
- A good business plan is a living document. It should be updated regularly.
The Business Model Canvas
Alex Osterwalder is a Swiss business theorist, author and consultant, known for his work on business and the development of the Business Model Canvas. This canvas is a strategic management and entrepreneurial tool that allows you to describe, design, challenge, invent, and pivot your business model.
Alex Osterwalder is a Swiss business theorist, author and consultant, known for his work on business and the development of the Business Model Canvas. This canvas is a strategic management and entrepreneurial tool that allows you to describe, design, challenge, invent, and pivot your business model.
The point of creating a business model canvas is to be able to take a snapshot of what’s in your head that moment in time, then identifying the financial risks involved, and finally get out of the building and test your model with live customers other than yourself.
In his book (Running Lean), Ash Murray defined and described the lean canvas as a business model validation tool. The lean canvas is adopted from the Business Model Canvas. And with the aid of the lean canvas, you can also be able to creatively document your business model, measure progress, and communicate learning with your internal and external stakeholders.
A look at the Lean Canvas
Learning how to create and fill in the lean canvas template enhances one’s thinking, planning strategies, and business creativity. And after completing a lean canvas, it becomes easier to create a standard business plan showing details of your marketing strategies, operational plans, and financial management.
Learning how to create and fill in the lean canvas template enhances one’s thinking, planning strategies, and business creativity. And after completing a lean canvas, it becomes easier to create a standard business plan showing details of your marketing strategies, operational plans, and financial management.
Other important things you should know are:
- The lean canvas captures your business model in a portable, one-page diagram.
- The lean canvas is the perfect format for brainstorming possible business models, prioritizing where to start, and tracking on-going learning.
- It is used to easily model the viability of the entire business.
Filling a Lean Canvas
There are nine (9) sections in the lean canvas template. Being able to correctly fill all nine boxes, means that you now have a complete lean canvas model of your business. It begins with you identifying three (3) problems that you think need to be solved. Once a problem has been recognized the next thing is to find an amicable solution to it. By deciding to go into business to exploit the opportunity, then it means you have been able to come up with an appropriate solution.
There are nine (9) sections in the lean canvas template. Being able to correctly fill all nine boxes, means that you now have a complete lean canvas model of your business. It begins with you identifying three (3) problems that you think need to be solved. Once a problem has been recognized the next thing is to find an amicable solution to it. By deciding to go into business to exploit the opportunity, then it means you have been able to come up with an appropriate solution.
At first hand, you need to know who your most important customer segment is, and how to target and get to your early adopters. What channels to your customers work best, and how much do they cost? Because finding efficient and reliable pathways to reach out to new customers will keep pushing growth to a positive direction.
Every business has a few key numbers that can be used to measure how well it is performing. So ensure to keep studying these key metrics all through the course of carrying out the business. Show the required startup costs under the cost structure section, listing all the operational cost that you will incur while taking your product to the market. And on the other hand, indicate under the revenue stream what value you think your customers are willing to pay, what and how do they currently pay, and how would they prefer to pay?
But most importantly, for you to be able to achieve large scale in business; one of the most important factors responsible for your growth is your unique value proposition. A single, clear, compelling message that states why you’re different and worth buying from. And your unfair advantage should be something that can’t be easily copied by competitors.
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Below is a lean canvas I helped a business owner to prepare. CJ Laundry Services is a single-room business, and recently when I met the CEO, he was really looking to expand the dry-cleaning business. He was hoping to quickly grow into a bigger business and target specific kinds of customers around the small town. When I sat down with him, I realized he has been doing all the washing with his bare hands for over 15 years, and still did the ironing by himself. So the yearly income stayed almost static, as there is limitation to the number of clothes he can wash as a human being using his bare hands.
The dry-cleaning business is just beginning to boom in that area, since over 85% of the people in the town do not own a washing machine. So I gladly prepared a lean canvas, to model his new plans for expansion, and that way he was able to clearly see a systematic approach he can follow with potential to achieve a huge turnaround in profit. And with this one-page document, it also became easier for me to come up with full details of a business plan for the expansion.
How a Standard Business Plan looks like
Most experts recommend a 20-25 pages document as a standard requirement of a good business plan. Everything one needs to know about a business should be contained in this piece of documentation. I will briefly show you how to be able to prepare your business plan by yourself, if you can take some time to learn all the basis. A general format should look like this:
(1) Title Page (2) Table of Contents (3) Executive Summary (4) Business Description & Vision (5) Definition of the Market (6) Description of Products and Services (7) Marketing and Sales Strategies (8) Organization and Management (9) Operational Plans (10) Startup Expenses and Capitalization (11) Financial Plans (12) Appendices
Use these Important Tips and get Going!!
Everything you need to be able to write a standard business plan is mentioned in this section if you want to learn how to do it by yourself:
Executive Summary
- Write this section last.
- Make it less than 2 pages.
- Sound enthusiastic, professional, and concise.
- Explain the fundamentals of your company, stating who you are, what you do and why.
Business Description & Vision
- Mission Statement-- stating your business purpose, usually in 30 words or fewer.
- Company Vision—statement about the anticipated future growth.
- Business Goals and Objectives—where you want your business to be, and how you will get there.
- Business Philosophy—what is important to you in business.
Definition of the Market
- Describe your business industry and outlook.
- Describe the critical needs of the industry.
- Who are your target customers?
- Provide a general profile of your targeted clients.
Description of Products and Services
- Describe all of your products and services.
- What factors will give you competitive advantages or disadvantages.
- How much will your products and services sell for.
Marketing and Sales Strategies
- What is the total size of your market? Who are your customers?
- What is the demand for your product and services?
- Describe your planned channels of distribution.
- Explain your sales strategy, pricing pattern, promotion and advertisement.
Organization and Management
- Provide a clear organizational chart showing all the staff position, including management positions as well.
Operational Plans
- Managing your account receivable/payable.
- Indicate any form of credit policy allowed.
- Number of employees, type of labour skills, training methods, and pay structure.
- Location of office.
- Methods of delivery of your services to customers.
Startup Expenses and Capitalization
- Cost of market research.
- All fixed costs needed for startup of the business.
Financial Plans
- Three(3) important financial accounting documents that should appear in your business plan is specified in the Table below:
Break-Even Point Analysis—Predict the sales volume, at a given price, required to recover all the total cost incurred so far.
Appendices
- Company brochures.
- List of business equipment.
- Maps and photos of office location.
- Market research studies.
- Copies of lease and contracts.
- Blue prints and plan.
No doubt, there’s a striking resemblance between the lean canvas and a full business plan document. The former is a semi-business plan summarized in one-page document, briefly presenting a systematic approach to the entire business idea.
Comparison between the cost structure and the corresponding revenue stream in the lean canvas, is used to model the viability of the business. A clear and comprehensive break down of these financial figures is found in the startup expenses & capitalization, and the financial plans section of the business plan document.
The various marketing and sales strategies to be adopted in the business is summarized into 2 sections of the lean canvas- channels and customer segment. And in the business plan, the section on definition of the market corresponds to the problem section in the lean canvas. The solution section of the lean canvas corresponds to the description of products and services section of the business plan. While the statement of the unique value proposition is the competitive advantage you will have in the marketplace over your competitors.
You can download a free template of the lean canvas, and use it to practice how to model a new business idea or an existing one for improvement. Once you can critically analyze and brainstorm all available options, and then structure it into a lean canvas model, coming up with details of a full business plan by yourself is possible with less hassle.
