Long gone is the 100-page business plan with detailed projections and estimations of market risk, customer makeup and pricing.
Why? Because business plans are just a bunch of guesses without any proof of whether anyone will actually buy the product being sold. They are wishful thinking at best. At worst, they are time consuming and distract you from the real objective, which is to build something that solves a real problem that someone else will BUY!
If you want to lead a high growth business, the over-researched, hypothetical product/service based business plan is a relic of the past.
Why? Because the old way of describing an idea by writing a business plan then validating the hypothetical product/service with potential customers then building something is just too frickin’ slow. In today’s fast-paced innovation environment, someone else will beat you to the punch.
So what’s an entrepreneur to do when they have a “BIG” idea?
First, get your idea sketched out.
But wait! Don’t get out your laptop and start downloading business plan templates from the U.S. Small Business Administration. Instead, start with Ash Maura’s Lean Canvas. Ash is the founder of Spark59, an Austin, TX, company that builds tools, content, and coaching to help entrepreneurs succeed. He is also the author of Running Lean.
The Lean Canvas is a one-page business plan model that focuses you on the most important factors for building a high growth business. Think of it like a blueprint rather than the full specifications for building a house.
Diagram Source: http://practicetrumpstheory.com/business-model/
Benefit of the Lean Canvas
You can sketch out multiple business models in an afternoon rather than spending weeks or months on endless details that will no doubt change quickly.
Remember your business model has to fit on a single page, so get to the point with as few words as possible. It’s the essence of your business idea that matters. This will also help you create your 30-second elevator pitch.
- Easily Consumed
There is a higher likelihood that more people will read a single-page business model than a thick book over run with details. It is also easier to keep a one-page document updated as your plan evolves to something that is viable.
In each of the boxes of the canvas, describe your business concept and the most important validation points (problem, solution, value proposition, target customers, channels, revenue, costs). If you can’t fill in the boxes on the diagram in a concise way, then you don’t yet have an idea worthy of a business plan yet.
And even when you do have an idea worth pitching to an investor, most I know only want to hear your 30-second elevator pitch and read the executive summary. Even fewer will pay attention during your presentation of your 10-page pitch deck. Only a true old-school businessperson will take the time to read every word of your 100-page business plan.
So stop wasting your time trying to achieve the perfect business plan and get back to testing your idea with real people who are willing to spend money on your product.
As Ash Maurya says,
“Instead of chasing a mythical perfect plan, what you need is a well documented starting point and a systematic process for going from your Plan A to a plan that works before running out of resources.”
If you are considering applying for SparkLabKC’s 2015 class, I recommend going through the above process before you apply. We prefer startups that have some customer validation and are on “Plan B” rather than an idea just off the napkin. That shows us that you ask good questions, are listening to the answers, and are willing to change to ensure the long-term viability of your business.
Our application process opens up on October 15th with a deadline of midnight December 1st.