The real purpose of a business plan is to create a well thought out document that states, in detail, your business dream and how you plan to develop and finance this business. Your Business Plan is, in fact, the roadmap to your future.
Additionally, a written business plan is usually required by investors and lenders. Just as important, stakeholders such as suppliers, customers and potential key employees want to know who you are and what you are all about.
The real value of planning lies in the process itself. This focuses your thinking and keeps you on track, in other words the key to success is going through the process. Thus it is the process itself that leads you to those issues that are required for your ultimate success and their appropriate resolution. In other words planning is the methodology by which you determine the key steps necessary to garner the information required to develop your successful business. In fact, for many situations, the planning process is actually more important then actually writing the plan,
Currently leading experts in business planning such as Alexander Osterwalder and Steve Blank suggest development of the Business Model Canvas (BMC) as the key to the process. From their point of view a BMC is actually a prelude, a precursor to the creation of your Business Plan.
Here is an example of a simplified BMC:
Fully understanding each of these questions and developing appropriate responses will lead you to a clearer, better understanding of all of the elements essential for the success of your enterprise. Note the importance of starting with the value proposition and matching this with the customer segment. Once that benefit fit has been established all else follows.
As an example, let’s create answers for a hypothetical BMC for MacDonald’s:
- Value proposition -> quick, inexpensive meal
- Customer segment -> public / seniors / families
- Customer relationship -> personal face to face service
- Distribution channels (paths to customers) -> in store / drive through
- Revenue stream -> company store sales / royalties / franchise fees
- Key activities -> training staff / marketing
- Key resources -> employees / locations
- Key partners -> franchisees
- Cost structure -> staff / locations / supplies /marketing
In other words, the BMC guides you to focus on all the key factors necessary to create the roadmap to the attainment your dream.
Note, developing a BMC is not something done all at once. It is an iterative process by which you are systematically testing out your ideas. Think in terms of this graph developed by Eric Reis.
About the Author:
Roger Robinson, PhD has been a SCORE mentor for over 16 years. His specialties include non-profits, business planning, specifically in restaurants and hospitality, recreational and arts and entertainment verticals. Read more about Roger here. Click here to schedule a free mentoring session with Roger or another SCORE mentor.