Business plans are a dying breed. That's the claim of some advisors who argue that the speed of modern innovation and markets makes planning and preparation too slow.
By the time you have prepared a well-researched plan covering everything from business mission and values, competition, marketing, finances and operations, someone else will have seized the opportunity. Yet, the high failure rate for small businesses suggests that more, and not less, planning would help ensure mistakes are avoided and that the opportunity identified is viable.
Lenders and potential investors usually require a business plan to provide a solid basis for expected future returns, whilst having a plan can make it easier to exit your business. There are, however, some shortcuts to business plans that can speed the process considerably.
Writing the perfect plan
Start by convincing the reader that your business has a clear purpose. Consider what question your business proposes to answer, such as helping companies change to clean energy or providing a unique repair service for owners of particular cars.
Readers of your plan, particularly those with a financial interest, will be seeking answers to these key questions as identified by Kevan Williams in Brilliant Business Plan1:
How much money will the business make and how soon?
Does it have solid cash flow?
How valuable might the business become?
Is there a clear opportunity in the market for this business?
Does the owner / management have the right skills to make it work?
For investors and lenders, another key question will be whether they can get their money back, and over what time frame. Remember though that not everyone will understand your industry as clearly as you do, so it is vital to write in concise and simple language, explaining any industry jargon or terminology.
Business plans typically include an executive summary, which condenses the whole plan into one or two pages and is best writing last. The key elements include a business profile with information about the owners and managers, product and market analysis, a marketing plan, operating plan, legal and risk management and the crucial financial plan.
It is also important to include an action plan outlining the steps needed to achieve your goals, along with the required resources. A rolling quarterly action plan can help keep the business on target and adjust to changes in the market.
There are a number of free tools available for aspiring planners, including a plan template and other guides offered by the Australian government's website, www.business.gov.au, along with those provided by state governments such as Queensland (www.business.qld.gov.au/business/starting/business-planning/business-planning-support).
A business plan is a living document and it is important to communicate it to staff, investors and others, while reviewing and updating it regularly.
An alternative: The business model canvass
For time-pressed entrepreneurs, an alternative to the traditional business plan is Alex Osterwalder and Yves Pigneur's "business model canvass"2. The model presents in a single page nine key aspects for owners to consider:
1. Value proposition: What is the offering and how is value created?
2. Key activities: What activities give customers value?
3. Key resources: What are the essential resources?
4. Key partners: Who might the business partner with?
5. Customer relationships: What relationship is being targeted - personal, transactional, co-creational?
6. Channels: How do you reach the customers?
7. Customer segments: Who is the business serving and what do they want?
8. Cost structure: What are the key fixed and variable costs?
9. Revenue streams: How can the business make money?
According to business advisor Alan Scott of Asmosys, the model can help spark innovation as well as quickly showing the basics of a business to an owner or employee.
"Banks and others still get comfort from a business plan, but the canvass comes into its own in responding to an agile market with fluid information," Scott says.
He says this is particularly useful for small businesses in determining their value proposition and identifying potential partners that could extend it.
Far from being dead, business plans are still vital, but as shown by the canvass model there are ways of speeding up the process.
Quotes from writer's own interviews
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This article represents the views of the author only and not those of American Express.
Anthony is a communication consultant at BWH Communication and a freelance writer with 15 years' experience in the stockbroking and media industries of Australia and Asia. He is a regular writer on business and other issues for publications in Australia and Japan. He consults on communication strategy to businesses ranging from private enterprises to professional service firms and publicly listed companies, with a particular interest in entrepreneurship in all its forms.