from Entrepreneur Zine 05 Feb 15 enhanced by Peter/CXO Wiz4biz
Are you Ready to Write a Business Plan? The most believed concept is: “Starting a business without a traditional Business Plan is an invitation for failure. Of course, Biz Plans, done correctly, can be a great roadmap.The real question is how detailed does your plan have to be. Business Plans serve a very specific purpose: to demonstrate where you currently are and where you would like to be. The problem is that – with any startup – you have very little information as to the best way to reach your Goals. Some startups don’t even know who exactly who, their customers are or exactly what their product should be, until they present their concept to a potential customer.
Planning & Forecasting are only accurate when based on a sufficiently long, stable operating history and a relatively stable environment. As a serial entrepreneur, I’ve come to appreciate the unpredictability of running a startup. It’s a fascinating ride to watch different iterations of your product strike new chords with an expanding customer base. I’ve come away from these experiences with a few insights into what should go into the Planning Phase of starting a business.
traditional Business Plans are becoming increasingly Irrelevant. Customers have never cared about your Business Plan, and nowadays, Investors are increasingly becoming less fond of them. For example, Silicon Valley-based accelerator – Y Combinator has helped fund over 500 companies in its 9 year history. Their portfolio includes giants like Airbnb, Reddit and Dropbox. Getting into Y Combinator is a competitive process, but one thing you absolutely don’t need to get in is a Business Plan. They don’t ever read them. Sam Altman, the president at Y Combinator said: “At the stage that we are operating at with a Startup, a Business Plan is irrelevant,” He said. “We would rather them spend the time working on their product, talking to users. What we care about is: Have you built a product? Have you spoken to users? Can we see the results of this?”
Map out your Business Model with a Erasable Ink. Typical written Business Plans take a lot of time to create and don’t allow the flexibility you need as your business grows. However, it’s still important to map out your business model and document your approach, which you can do effectively with a simple “Flexy Biz Plan”. It is an actionable and (in effect) an entrepreneur-focused plan. It focuses on the key factors of starting a business – as listed below.
Flexy Biz Plan
1) Problem, significant, of the Customer.
2) Solution: What is best Solution?
3) Unique Value Proposition. the characteristics of how your product has advantages over other solutions
4) Target Customers: Who are they? Have you talked to them about your product? What is their feedback? do you need to modify your product to meet their needs?
5) Marketing & Distribution: Once you get acceptance by Customers, how are you going to tell other potential Customers about your product & get it to them?
6) Costs: Development, Wages, Marketing, etc.
7) Revenue: How do you determine Margins to optimize profit or go for market share?
8) Vision: What are the long-term Goals of your company?
9) Metrics: How do we measure our progress & determine success?
Advantages. This model captures the same level of information as a traditional Business Plan, but in a single page. When you meet with customers or potential investors, you won’t have much time to describe your entire vision. If you can describe your customer’s problems clearly and succinctly, you can get to the heart of why your solution fits. It also gives you much more flexibility to modify your tradition Business Plan – as you need to.
Starting, by filling out the Flexy Biz Plan [FBP] with as much information as you know now. This will help you identify what you know & don’t know about your business. Don’t be afraid to be brutally honest with yourself, and you can even leave certain areas blank.
Monitoring the FBP. After you complete the Flexy Biz Plan, you can quickly identify the weakest parts of your business. At this point, you can begin to track & gather data about those areas to measure your progress. This monitoring will test some of the most fundamental aspects of your plan. For example, let’s say you identified Social Media as the optimal channel for reaching & capturing customers. After a few months, you may learn that your Customers are not as socially active as you originally projected. Considering this was your main plan-of-action for reaching your Customer. Now you’ll have to re-assess your understanding of who your market is and where they can be reached.
Re-Evaluating. After a few months of monitoring, you will hopefully have learned enough to be able to return to your FBP and update it based on your new findings. And, if you’re like most Startups, you won’t get it right the first, second, or probably even third time. Re-evaluate your FBP every few months (or as needed), to update your approach, because of new info as circumstances have changed.
Timing. As a startup, you are in a race to deliver Customer “value”. Sinking time into writing out a traditional Business Plan, can be a tremendous waste of time. You can get all of the benefits of a Flexy Biz Plan on one page, and this will help you discover the two or three things that matter most today.
Comments: Is there anything you can add to this?