Business Planning is a critical activity for any business. A business plan provides direction and keeps you on track. It will help you focus on your top priorities and clarify who your customers and how you can serve them effectively. Read on to find out my recommendation on how we as small business owners can take the pain out of writing our business plans. I also have a handy template for you to download at the end of the article.
The value of writing a business plan is in the thought processes that are required to write the plan, not the final document itself. By creating your own business plan, you are going to have to think about how you are going to build your own business and that is where the real value is for you.
Typically as a small business owner our business plans are for internal use. Even if there is no extenal requirements for developing a plan having one will make developing your strategies much easier.
If you are seeking finance from a bank or possibly a 3rd party investor then a business plan is an essential document for communicating how you plan to make money.
When you are developing your plan keep your audience in mind and include as much detail as required.
To have a successful business of any size you need to be creating value for your customers. When developing your business plan keep this at the top of your mind. Focus on what you can do for your customers and how to reach them, rather than the other way around! You plan should clearly cover the following areas.
- What is the customer problem you are looking to solve?
- What is your solution to these problems?
- Who are your customers?
- What type of relationship do you expect to have with your customers?
- How are you going to find your customers?
- Are there any key partnerships that your business relies on?
- What are the main things you need to meet your customers needs?
- What are your costs?
- How are you going to make money?
Small businesses’ advantage over larger companies is their ability to react quickly to customer needs. This can sometimes mean a complete shift in your main business activities. If your business plan is a monster document that makes trees tremble at the thought of being printed then it’s way too big! How likely is it that you are going be to keeping it up to date? I know I wouldn’t. I’m way too busy to do this. But a one page? Sure I can manage that!
So here’s the Kuter Solution to writing your business plan – the Business Model Canvas.
The Business Model Canvas was originally published in the book Business Model Generation by Alexander Osterwalder, Yves Pigneur (and many others). It has been released under Creative Com
mons license, which means anyone can use it and change it to suit their needs!
In the words of Alexander himself:
We designed the Business Model Canvas (BMC) to answer a single question: How does your business create, deliver and capture value.
And here is what the template looks like:
If you are a little unsure how to fill in each section here’s a few hints. Note each of the sections relate to the 9 key things a plan needs to cover that I wrote about above:
|Value Proposition||What is the problem that you are solving for your customers?
What value are you creating for them?
|Key activities||What are your businesses main activities?
You may want to think about this based on your channels vs your customer relationships.
|Customer Relationships||What is the nature of the relationship that your customers expect to establish with you?
What relationships have you already established?
|Customer Segments||Who are your customers? Are you catering for mass market or focusing on a niche?
Who is your ideal customer?
|Key partners||Do you have any key partners/suppliers that are critical to your business?
What are the motivations for your partners? Are they purely financial or are there other factors at play in the partnership?
|Key Resources||What resources do you need to create value for your customers?
Do you require physical goods?
Are you a consultant? Then time would be your key resource.
|Distribution Channel||How do you reach your customers?
How do your customers reach you?
Which channels are working best for you?
|Cost Structure||Where do you incur the most costs within your business?
Think about your costs for your customer channels, key activities, partners.
|Revenue Stream||How are you making money? What activities and value propositions are your customers happy to pay for?
How much are your customers paying?
What is the percentage does each stream contribute towards the total revenue?
How do you receive revenue?
When you are finished don’t just keep your business plan on file (backed up, of course). You need to view and review your plan regularly. It should be reviewed at the same intervals as your IT strategy, which I recommend you do at least every 6 months.