Every business needs a plan but the long boring business plan is becoming increasingly irrelevant. In a startup things will never go as planned. You may not need a detailed plan that you won’t use anyway, unless you need tens of millions to get underway.
What you need is a plan that outlines measurable and achievable goals. Most business plans had nothing to do with what the businesses eventually became. Companies who start out to serve consumers end up becoming partners with niche enterprises. Business-to-business startups give up their goals and build products for consumers.
“Planning and forecasting are only accurate when based on a long, stable operating history and a relatively static environment,” said Eric Ries in the introduction for The Lean Startup. “Startups have neither.”
If you are thinking about making a presentation to a financial institution for funding, then don’t skip the boring detailed plan. They will demand it. And that’s only because they will require that you have one in order to get the funds. If you intend to bootstrap, what you need is a simple actionable plan of action. It should focus on what should be done instead of what trying to achieve what is on paper.
Here is why you should forget that lengthy business plan.
1. The concept of starting a business without a plan may sound ridiculous. The good news is you are not going into business without any plan at all. The only thing different is that you will not waste your time researching and making assumptions when the immediate future is highly unpredictable for most startups.
2. You can plan and research all you want, but the first time you encounter something you didn’t expect out in the marketplace (which happens all the time), the plan goes out the window.
3. “A new venture is a means, not an end. A new enterprise should be pursued primarily to help you achieve your goals, like providing a better life for others, satisfying a passion of yours, or enjoying the benefits of a technology you have invented.
In that context, it could be a social enterprise, or even a hobby, in which case a business plan may not be beneficial.” says Martin Zwilling (Veteran startup mentor, angel investor)
4. “Business plans are about boxing you in, rather than letting you shape and mold your business as you see fit. They will require you to clearly define your business down to the smallest morsel, leaving very little room for creativity and ingenuity once you open those doors.” said Mike Michalowicz (Author. He wrote Profit First and other business books)
The Lean Canvas Approach
Instead of a long boring business plan that could take months to put together, the Lean Canvas offers a better alternative using a 1-page business model that takes under 20 minutes to create. Created by Ash Maurya and adapted by Alexander Osterwalder, a lean canvas is an actionable and entrepreneur-focused business plan.
It focuses on problems, solutions, key metrics and competitive advantages.On a single page, you can capture information you need to kick startup your new business. It also gives you much more flexibility to switch to a plan B if plan A doesn’t work out, allowing you to transition to a new approach easily without wasting time and resources.
Merits of the Lean Canvas
These are the four reasons why the Lean Canvas is a better approach to putting together a plan for a viable business (as shared on Lean Stack
1. “Fast. Compared to writing a business plan which can take several weeks or months, you can outline multiple possible business models on a canvas in one afternoon.”
2. “Concise. Lean Canvas forces you to distill the essence of your product. You have 30 seconds to grab the attention of an investor over a metaphorical elevator ride, and 8 seconds to grab the attention of a customer on your landing page.”
3. “Portable. A single page business model is much easier to share with others which means it will be read by more people and also more frequently updated.”
4. “Effective. Whether you’re pitching investors or giving an update to your team or board, Lean Canvas’ built-in presenter tools allow you to effectively document and communicate your progress.”
Time is of immense importance to startups. Getting to market faster can get you the feedback you need to iterate and improve. Don’t waste all your time trying to put together a lengthy business plan you will not use in the end. Just launch already!
