In a previous post, I discussed the Business Model Canvas. I received a lot of emails from my readers asking whether they should completely ditch the business plan in favour of this. My first instinct was to say “Yes, don’t bother”. But the correct response is “Yes, don’t bother for now”.
The fact of the matter is that you need a plan before the actual business plan. Why? Because business plans are inherently static in nature. They lack flexibility. Here’s a definition of a Business Plan:
"A business plan is a written statement of your business. It highlights what you want to achieve with it and how you will achieve it."
This is a succinct definition of a 60 page document that we call the ‘Business Plan’. Inspired entrepreneurs leap into its creation with enthusiasm. It’s quite the sight, really. Some spend nearly 6 months on this behemoth of a document. And you can’t really blame them. After all, a Business Plan outlines every key component that dictates success like marketing, distribution channels, revenue, competitive analysis etc…
The majority of the components of a business plan cover the “how you will achieve it” part of its definition. But what if the “how you achieve” your vision changes? And it often does, mind you. Most people embark on the ‘Business Plan’ as their first course of action. This is the worst time to be writing a plan of this nature. They are still in the ‘uncertainty’ phase. They haven’t even spoken to their potential customers yet, nor have they validated their riskiest assumptions. As a result, the completed document is nothing more than 60 pages of creative writing.
This is why we need something shorter to work with while we’re still in the “uncertainty” phase. Something that won’t take us weeks or months to write-- but an hour at most. Something that can guide us while we iron out the uncertainties. We need a plan before the plan -- The Business Model Canvas.
Toggle Image: Business Model Canvas
A canvas like this captures the business model in one page. It shows how your company will create value, deliver the value, capture value and make a profit. A stakeholder can grasp your intended business within a few minutes of scanning this canvas.
However, it’s important to note that, at this stage, the canvas is filled with assumptions. Think of yourself as a scientist. A business scientist. Your canvas is your hypothesis. Now you have to conduct experiments to validate your hypothesis. But don’t worry, you won’t have to be cooped up in laboratory all day. No - you’ll have to get out of the building and talk to your customers.
Further Readings
Forbes - Why Business Plans Are A Waste Of Time
3 Reasons To Ditch The Business Plan For A Business Model Canvas