I have tried a different approach to business planning with my students this semester.
While I have defended business planning in the past, I also recognize that it is often not used effectively. People rush into planning without making sure they are writing a detailed document about something that can actually make it in the market. I also see that people who move into writing a business plan too quickly can get lost in the details.
It is this second issue that has led me to add a new step in business plan development for my students (and with the alumni I work with, as well).
I have integrated a step between the cursory opportunity assessment process and developing a full business plan.
The step is based in large part on the ground breaking work of Osterwalder and Pignuer on business modeling. It has proven to help them see how the moving parts of the business fit together and work (or don’t!) before they dive into the details of planning.
Here is the assignment (this can serve a s good outline for anyone planning a venture):
1- Mission Statement (25 words)
2- Business Concept (1 page max) – 5%
- Additional description of the concept beyond 25 words in mission
- Key values entrepreneur brings to the business
- Key goals and objectives, including personal financial and non-financial goals
3- The Value Proposition (2 pages max)
- Based on industry research, why is this an opportunity?
- What are the macro trends that support this opportunity?
- What are the more focused localized trends that tie into industry trends above?
- What is the “pain” in the market does the business address?
- Cite evidence to support
4- Target Market (1 page max)
- Who are they?
- Why are they your target?
- What are the key attributes that drive their decision to purchase?
- Who are your main competitors and how well do they address customer preferences above?
5- The communication and distribution channels (1 page max)
- Where do your customers get their information to make a purchase decision?
- What form do they prefer this information in?
- How do they want you to get the product or service to them?
6- The relationships established with clients (1/2 page max)
- How important is customer service in the business?
- Do we need to deal with each customer on a personal basis?
- Do they just want us to get them the product and leave them alone?
7- The key resources needed to make the business model possible (1 page max)
- People – estimated cost for each
- Equipment – estimated cost for each
- Inventory – how much to start and how much on hand (if applicable)
- Physical space
- Operating cash on hand
8- Key Activities (1 page max)
- What are the “must do’s” to get this ready to launch (Feasibility Plan)?
- What are the “must do’s” to get the first customer (Feasibility Plan)?
- What are the “must do’s” to keep customers coming in the door and to keep them from leaving us?
- What are the “must do’s” to support growth?
9- Key Stakeholders (1 page max)
- Who are your most critical stakeholders and what will get them to work with you? (This included sources of outside funding, if needed!)
10- The revenue streams (1 page max)
- What generates revenues for the business?
- What will pricing strategies be?
- What is our pricing structure?
11- The cost structure (1 page max)
- What is the cost per unit?
- What is the overhead cost to operate?
12- Breakeven (One sentence max)
- When will we breakeven based on these initial estimates? (More precise figures will come in the business plan)