by: Pete Carvell
I have seen it time and again. A would-be entrepreneur has an idea and one of the first things they are told is “You need a business plan.” They are then handed a template the size of War and Peace. They swallow hard, trying not to show fear.
Creating a business plan has become a “one-size-fits-all” requirement for anyone thinking about starting a business – whether a taco stand or a sophisticated high-tech venture. I do not believe this is necessarily the best approach for someone who is in a pre-startup phase or who has just taken the first tentative steps to opening a business. I often wonder how many clients, burdened with the knowledge that they must develop a full-fledged business plan, think it’s too complicated and time-consuming and give up their dream. How many really good ideas are sacrificed at the altar of the “business plan”?
I ask the question: Why do we ask pre start-ups and nascent start-ups to even consider a business plan in the first place? If one of the reasons for developing a plan is to obtain funding from a bank or other financial institution, bear in mind that most banks or other lenders do not fund start-ups and only consider talking to a client if the business has been up and running for at least two years with a viable track record. So why spend time on something that takes too long to write and may not help you succeed? The time could be better spent working on the business.
Of course, a no-plan option is not the solution either.
For pre- and new start-ups, there are alternatives to the business plan. One of the most popular is the Business Model Canvas. This is essentially a one-page graphic display covering nine elements that provide a coherent view of the business’ key drivers:
- Customer segments: Who are the customers and what do they think?
- Value propositions: What is compelling about the product/service?
- Channels: How does the product/service get to the end consumer?
- Customer relationships: How do you interact with the customer?
- Revenue stream: How does the business earn revenue?
- Key activities: What uniquely strategic things does the business do to deliver its proposition?
- Key resources: What unique strategic assets must the business have to compete?
- Key partnerships
- Cost structure
What are the advantages to the Business Model Canvas?
- Focus: By stripping away the “stuff” in a traditional business plan, it improves clarity and focus
- Flexibility: It’s a lot easier to tweak the model with something that is on one page
- Transparency: The team, potential partners and other interested parties will have a much easier time understanding the business model
This is only one alternative to the traditional business plan; but it is one that makes a lot of sense for an entrepreneur who is just beginning to live the dream.
About The Author:
Princeton University – B.A. degree
Commissioned Officer United States Navy – Tours of duty in Washington D.C. and Guantanamo Bay Cuba with the Naval Security Group.
Thirty six years with General Motors International. Initial assignments in sales and marketing with gradual expansion to include management positions covering warehousing and distribution, strategic planning, finance and product development.
Assignments in Lima Peru (short term), Brazil – 8 years, Antwerp Belgium 4 years, Brussels Belgium – 3 years and Mexico 6 years with responsibility for GM activities in Mexico, Central America and the Caribbean.
Joined SCORE in 2002. Held positions as Chapter Chair, Assistant District Director and District Director.