If you have been thinking of starting a business, you have obviously heard and read about the importance of a business plan. While business plans are quite useful, that’s not to say they don’t have their problems. Business plans take too long to write, yet most of those you will share your business plan with probably won’t read it end to end.

Updating your business plan regularly as your business grows is also quite difficult. For many entrepreneurs, the business plan is simply a document that they have to present to the bank or investors in order to secure funding.

While writing a business plan is hectic, planning your business is still critical. Starting a business without planning out key activities is a recipe for failure. What if you had a way to capture the essence of your business in a simple, one page template instead of having to write and format a 10 page business plan?

Fortunately, you can do that using a template known as the Business Model Canvas, which was developed by Alexander Osterwalder.

WHAT IS THE BUSINESS MODEL CANVAS?

The Business Model Canvas is a planning tool that allows business owners to make a graphic representation of the different variables involved in starting a business. It provides an easy way to visualize a business without having to worry about all the details that go into a business plan.

A Business Model Canvas can also be used to analyze the current situation of an existing business. Below is an example of what the Business Model Canvas looks like.

Business Model Canvas

While the Business Model Canvas provides a quick and easy way of visualizing a business, it has one major flaw. It does not focus on the product/market fit. In other words, the Business Model Canvas does not care whether the business solves any real problem for its customers.

Why is this so much of a problem?

Think about the last time you went to buy something from the supermarket. What did you buy? More importantly, why did you buy it? My guess is that you did not buy whatever you did just because the supermarket had it in stock, or because you had some money to spend, or because you saw the product being advertised on TV. Instead, you bought it because you needed it, because it helped you solve a certain problem.

For example, if you bought a set of batteries for your TV’s remote control, you bought them because you needed to use the remote control but could not because the batteries had run out. If you bought a refrigerator, you bought it because you needed to preserve food.

If you bought a lawn mower, you bought it because you need to mow your lawn. The point here is that each of your buying decisions is determined by a need or a problem.

What the above tells us is that for any business to attract customers, it needs to solve a certain problem for the customer. It also needs to solve the problem in a unique way in that convinces customers to buy its products instead of available alternatives. Not only does the business need to solve a problem, it also needs a unique solution to the problem.

Without that, the business is bound to fail.

Unfortunately, the Business Model Canvas does not consider on this crucial aspect of a business.

To ensure that this very important aspect of your business is not forgotten, the solution is to use another business planning tool known as the Lean Plan Template.

WHAT IS THE LEAN PLAN TEMPLATE?

Just like the Business Model Canvas, the Lean Plan Template is a simple tool that allows you to quickly and easily capture the essence of your business. The major difference is that the Lean Plan template places more focus on the problem your business is trying to solve.

The premise behind the Lean Plan Template is that it is impossible to create value and make your business model work without first understanding your customer’s problems.

Once you know what your customers’ problems are, it becomes a lot easier to define solutions, come up with a unique value proposition, determine the sources of revenue, and so on.

On the other hand, without a clear understanding of your customer’s problems, it becomes challenging to articulate some aspects of your business, such as the key resources, key activities, and key partners, all of which are part of the Business Model Canvas.

Some of the elements that make the Lean Plan Template better suited to planning your business compared to the Business Model Canvas include:

Problem: The number one reason most businesses fail is that they set out to solve the wrong problem. According to CB Insights, majority of business (42%) fail because they solve problems that are interesting rather than problems that serve a market need. This leads to building of the wrong product that customers are not interested in. By including a description of the problem, the Lean Plan Template ensures that entrepreneurs do not end up making this costly mistake.

Solution: Apart from understanding customer problems, a business also needs to ensure that it is offering the best possible solution. By including this section, the Lean Plan Template ensures that the business is focused not on providing a solution the owners are obsessed with, but a solution that actually works.

Competition: A business also needs to think about the other players offering solutions to its prospective customers. The aim of this section is not to discourage you from working towards your vision, but rather to encourage you to think about how to give your business a competitive edge. Without thinking about this, your business has no way of grabbing a portion of the market share from already existing players within the market.

Milestones: Starting a business is a very chaotic undertaking. There are hundreds of things to be done. If you are not careful, you can easily end up devoting your time and effort to activities that do not move your business forward. To avoid this, you need to decide beforehand what important activities you need to undertake and the key metrics that you will use to evaluate your business’ performance. This helps you to stay on course and prevents you from chasing the wrong goals.

As you can probably tell so far, the Lean Plan is designed to help entrepreneurs test their business. It is not meant for investors, customers or consultants. Still, the entrepreneur can use the Lean Plan template to engage with all these people and validate their business idea.

ELEMENTS OF THE LEAN PLAN TEMPLATE

The Lean Plan Template is made up of 12 elements, which fall under 5 main segments.

Brought together, these 12 elements give the entrepreneur a comprehensive overview of the business and helps to ensure that the business has a product/market fit.

Below is a quick overview of all the sections and elements that are included in the Lean Plan Template.

1. Strategy

This section of the Lean Plan Template outlines gives an outline of your business and explains what the business intends to do. The strategy section is comprised of five key elements:

Business Identity: This gives a one sentence overview of your business. Who are you? What does your business do? What value do you provide to your customers? You can think of this as your unique value proposition. For example, a content marketing agency’s might have their business identity as “Droidcontent helps businesses attract, nurture and convert leads through valuable, in-depth content that speaks and sells to your target customers.”

Problem: This gives a brief description of the problem you are trying to solve for your customers. Going with our content marketing example from above, the problem can be stated as “Small businesses do not have enough manpower to exclusively dedicate to their content marketing efforts.”

Solution: This is a brief explanation of how you are solving the problem you described above. Here, you will essentially give a description of your products and services. Our content marketing agency can have their solution as “Droidcontent offers monthly content packages. Business owners can focus on other aspects of their business knowing that we are handling all their content needs.”

Target Market: Here, you should give a description of the customers your products and services are targeting. What is the size of the market? Are you targeting one or multiple segments within the market? Remember, the aim is not to conduct in-depth market research at this stage. You just want to get a rough idea of who your customers are and whether the size of the market is enough to sustain your business.

Competition: Here, you should describe other business who are trying to solve the same problem as you. Don’t just think about businesses that are offering the offering the same products and services as you. Instead, think of any other alternatives that your customers might use instead of your products, even if they are not within the same industry.

For instance, if your business is a hotel, you are in competition not only with other hotels, but also with individuals letting out their apartments and condos on Airbnb. In addition, you should also include a brief description of any factors that differentiate your business from your competitors.

2. Tactics

This section describes the tactics you will use to implement your strategy. This section comprises four key elements:

Sales channels: This should give a description of the channels you intend to sell your products and services. Are you going to open a brick and mortar store? Will you sell online? Or will you sell your products through a distributor? Explain the channels you are going to use to get the product to the market.

Marketing Activities: Here, you should give a brief explanation of the key things you will do in order to reach your customers. Will you advertise online or through traditional mass media? Will you attend trade shows to promote your products? Will you hold a grand opening? Or will you partner with other businesses?

Team: This should give a list of the key team members and their roles. This is important because your team can be the difference between success and failure. If there are some key roles that you intend to hire once the business is running, you should also list them here.

Partners and resources: If your business needs to work with other businesses in order to be successful, you should list these businesses here. If your business needs any key resources, you should also list them here.

3. Business Model

Without money, you cannot claim to be in business. In this section, you need to describe how money will flow into and out of your business. This section has two key elements.

Revenue: Here, you need to describe how your business will make money. The aim is to give you a general idea of revenue, so there is no need to come up with detailed financial forecasts at this stage. Simply write down a bulleted list of your primary revenue streams and you are good to go.

Expenses: Here, list down the expenses you will incur when running your business. Once again, don’t be so concerned with detailed forecasts and numbers. You just want to make sure that you understand all the costs that will be associated with running your business.

4. Schedule

This is the last section of the Lean Plan Template. It contains only one key element:

Milestones: This section contains a list of tasks, activities, responsibilities and key milestones that you need to undertake and achieve as you set out building your business. These include tasks like registering your business, getting licenses and permits where necessary, launching the business, and so on, as well as milestones such as getting the first 100 customers, reaching a certain number of app installs, hitting a certain revenue target, and so on.

Now that you know all the elements that make up the Lean Plan Template, let’s take a look at a sample Lean Plan Template to see what it actually looks like.

 

Business Identity

Droidcontent helps businesses attract, nurture and convert leads through valuable, in-depth content that speaks and sells to your target customers.

 

Problem

Small businesses do not have enough manpower to exclusively dedicate to their content marketing efforts.

 

Solution

Droidcontent offers monthly content packages. Business owners can focus on other aspects of their business knowing that we are handling all their content needs

Target Market

Small business owners with an online presence

Businesses without a dedicated content marketing department

 

The Competition

Other content marketing agencies

Freelancers

Content mills

Sales Channels

We sell directly through our website

 

 

 

Marketing Activities

Email marketing campaign

Social media marketing

PPC marketing

SEO

Revenue

Content writing packages

 

 

 

Expenses

Payroll

Marketing and advertising

Web hosting and domain registration

Milestones

Build website (Jan 2019)

Launch (Feb 2019)

Reach out to social media influencers (Feb 2019)

Team And Key Roles

Andy: Owner

Peggy: Sales and marketing

Erick: Operations

Partners And Resources

Dylan: Influencer

Kerr: SEO consultant

As you can see, the Lean Plan helps an entrepreneur to flesh out the most important aspects of their business in one page and to come up with all the assumptions on which the business will be based.

Keep in mind that, while the Lean Plan Template is designed to enable you distill the essence of your business easily and quickly, there are some considerations you need to follow in order for it to be useful.

Specifically, you should use sentences that are simple, specific and concise, but at the same time, they need to be meaningful. For instance, instead of writing “content” as a problem, write “Small businesses do not have enough manpower to exclusively dedicate to their content marketing efforts.”

In addition, after creating your Lean Plan, you should go through it and try to see whether it tells a complete story about your business. A great Lean Plan should tell a story about your business. For instance, using the content marketing agency example, here is the story from their Lean Plan.

Droidcontent helps businesses attract, nurture and convert leads through valuable, in-depth content that speaks and sells to your target customers (identity). Our aim is to help small business owners with an online presence (target market) to create content even if they don’t have a dedicated content marketing department (problem) by providing monthly content packages, allowing them to focus wholly on running their business (solution).

They will know about Droidcontent through email, social media, PPC marketing and organic search (marketing activities) and will buy the packages directly from our website (sales channels). Our packages will offer a hands-free content marketing approach that will make our services stand out from those of other content marketing agencies, freelancers and content mills (competitors). We will charge our customers depending on their chosen package (revenue streams).

We believe this will help to cover our payroll, web hosting and domain registration and marketing costs (expenses). We hope to start building the website in January 2019, launch the business in February and reach out to social media influencers in February (milestones). The business will be led by Andy, Peggy and Erick (team). Dylan and Kerr will help us with our marketing efforts (partners and resources).

If your Lean Plan tells such a story, good job!

TESTING YOUR IDEA

Developing a Lean Plan is only the first part of the work. Just because your Lean Plan is complete does not mean that you have a business that is ready to launch.

Remember, the Lean Plan was only meant to help you come up with the main assumptions about your business idea. Before you launch the business, you need to validate these assumptions. This helps you reduce risk by confirming that your idea is viable.

To test your assumptions, you need to go out and talk to your potential customers. Find out whether they actually have the problem you think they do, what they think of your potential solution to these problems, how much they are willing to pay for the solution, what alternatives they currently use, and so on.

Talking to potential customers will also help you figure out the best way to market and sell to them. Don’t skip this step. Many businesses have failed because of launching before testing their idea.

REVIEW YOUR RESULTS AND REFINE YOUR PLAN

Talking to potential customers as you test your idea might reveal some things you might have overlooked while coming up with your Lean Plan.

For example, you might find out that while the potential customers have the problem you think they have, they do not prefer your potential solution. In this case, you might need to refine your Lean Plan in accordance with the preferences of your customers.

The good thing here is that making revisions to your Lean Plan is a lot easier than making revisions to a detailed business plan. You can continue making more revisions to your Lean Plan as you learn more about your customers.

WRAPPING UP

The Lean Plan Template is a great tool that allows you to quickly and easily capture the essence of your business. Unlike a business plan, the Lean Plan takes just a few minutes to write and is a lot easier to update. The Lean Plan allows you to flesh out all the important elements of your business in a single page that you can easily view and share.

The Lean Plan is also much better than the Business Model Canvas because it places more focus on the problem you are trying to solve for your customers, which is a very critical aspect of every business.

The Lean Plan helps you to easily test your business idea for viability before investing a lot of time, effort and money into the idea. The Lean Plan is a live document, which means that it should be constantly updated as you interact with your customers and learn more about them.

Business Model Canvas Alternative: Lean Plan Template

Business Model Canvas Alternative: Lean Plan Template - #BusinessModel #BusinessModelCanvas #LeanPlan #LeanPlanTemplate #Cleverism

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