Lean business plans sharpen focus, clarify priorities
BY MARK FROHMAN
Monday, December 25, 2017
There’s no one right way to write a business plan.
What’s important is that your plan meets your needs and the needs of the intended audience. Most business plans fall into one of two categories: traditional or lean.
Traditional business plans are most common, use a standard structure, very detailed and comprehensive, and take more time to write. They can be dozens of pages long. Lenders and investors commonly request this plan.
Lean business plans also use a standard structure. They focus on the key elements of your business and can be practical and useful when starting a business. Lean plans are typically a few pages. Lean plans describe business fundamentals such as value proposition, infrastructure, customers and finances. They’re useful for gaining focus and clarifying priorities and tradeoffs especially during a startup.
There are different versions of lean formats but one of the better ones is the Business Model Canvas developed by Alex Osterwalder. Here are its elements that may help you re-evaluate your existing business plan or get ready to write one.
■ Key partnerships: Note the other businesses or services you’ll work with to run your business. Include suppliers, manufacturers, subcontractors and similar strategic partners.
■ Key activities: List the ways your business will gain a competitive advantage. Highlight how you clearly separate your product or service from the competition. whether in sales technology or support.
■ Key resources: List resource you’ll leverage to create value for your customer. Your most important assets could include staff, capital, or intellectual property. Don’t forget to leverage business resources that might be available to female, minority, veterans and Native Americans, among others.
■ Value proposition: Make a clear and compelling statement about the unique value your company brings to serving real needs in the market.
■ Customer relationships: Describe how customers will interact with your business. Is it automated or personal? In person or online? Think through the customer experience from start to finish.
■ Customer segments: Be specific when you name your target market. Your business won’t be for everybody, so it’s important to have a clear sense of who your business will serve.
■ Channels: List the most important ways you’ll talk to your customers. Most businesses use a mix of channels and optimize them over time.
■ Cost structure: Will your company focus on reducing cost or maximizing value? Define your strategy, then list the most significant costs you’ll face pursuing it.
■ Revenue streams: Explain how your company will actually make money. For each product or service category show past and forecasted sales and profit.
Dr. Mark Frohman is the owner of Frohman Consulting Corp. and a counselor with SCORE, a nonprofit business-consulting group.