Entrepreneurs are obsessed with business plans, and much of that is because, in traditional business teachings, lecturers and trainers stressed the importance of the business plan. I would know, I have been a business lecturer for well over a decade. However, this may not be the best first step for an entrepreneur, and here is why.
Business plans are obsolete as soon as you write them.
Imagine attempting to implement your business plan that you write four years ago in this COVID-19 environment. Simply put, it won’t work. The environment has changed drastically, and as such, your tactics and strategies must also change. We need not use something as drastic as a pandemic to drive home the point that they are generally static and allow for little flexibility. The environment in which we do business changes from year to year. There are new market entrants; there are new technologies that pose opportunities or threats, new legislation, shifts in the way in which consumers purchase – the changes are not exhaustive. A business plan cannot capture the dynamism of our world and markets fueled by globalization and technology.
Business plans have very specific uses and are second step not a first.
The business plan does have its place – I am not saying to dismiss it entirely. If you require funding, especially from a traditional institution, they will ask for a business plan, and you must oblige. However, before you even begin your business plan, you should be mapping out your business model. The business model through a business model canvas allows you to illustrate and map out the rationale of how an organization creates, delivers, and captures value for the customer. The business model is where you should begin. It allows you to see the inter-relationship among the elements of your business and is the starting point for creating a sustainable strategy. The business model, unlike the business plan, also allows you to modify easily as elements in your business environment change or you shift and pivot your strategy because it allows you to see in one glance how all the other interrelated elements will need to be modified. I do have a pre-recorded webinar about creating your business model canvas.
Finally, your business model can serve as the starting point for writing a one-page business plan that you can provide to stakeholders and potential business partners. It will allow you to give them a snapshot of the main elements of your business plan without giving away your entire strategy. I know confidentiality is a huge concern for small business owners. I show you how to move from a business model canvas to a one-page plan in my webinar. You can then use your one-pager to build out a timely and full business plan that aligns with the most recent version of your business model canvas.
I hope this has been of value to you. Like and share with others.