lean business plan

lean business plan

The Importance of a Lean Business Plan

1. Introduction

Are you formulating a business idea and unsure of what the next step is? Your initial step is to set up a lean business plan and revising it as your business develops. The following essay will explain what a lean business plan is and how it is beneficial compared to a traditional business plan. A lean business plan is more flexible and broad compared to the traditional business plan. A lean business plan consists of nine basic parts: the first part of the plan is the business idea. This is where you briefly describe your business and what it does. The second part is the strategy, where you explain who your targeted customer is and the strategy of getting your product or service to them. The third part of the plan is the location. Location is very important in choosing your business, especially where your business is located can greatly impact the outcome. The fourth part is the tactics, here you will explain the “game plan” on how you will reach or communicate with your customer. The fifth part is the business offering, which is what your product or service is to the consumer.

2. Benefits of a Lean Business Plan

1. Practical and can be done alone or person in less time This is what I might know, that business planners have a perception that business planning is a very complex and time-consuming activity. But with a lean business plan concept, this can be a solution because it can be done anytime and very practical. A business plan that only contains 1-3 pages will make it easier to understand and its preparation time is relatively faster. Step by step is more focused on the most important things, no need to think of a complex thing. This the practicality of a lean business plan can be very suitable for SMEs.

However, the correct perception of a Lean Business Plan is not just for SMEs and SoloPreneur in creating a business plan. Lean Business Plan has its advantages and suitability for the current business conditions that are very dynamic and uncertain. But for more details, you can see the advantages of Lean Business Plan as follows:

Generally, follows this specific one. A private practitioner failed to go through the process, usually assuming that business plans are for entrepreneurs. This usually happens until he started thinking to develop an MSME business. He also mentioned the difficulty of making a business plan because it usually takes too long. Honestly, we have a common understanding that business planning is a complex and cumbersome activity. The complex perception of business planning is indeed influenced by several factors, this will be explained further in the article “Business Plan: Important and Can Simplify Complex Business Concepts”. At that time, I invited him to try to do business planning with a simpler concept, a Lean Business Plan. From this case, I know that someone who works alone has a perception that making a business plan is complex and time-consuming. But the lean concept offered in this lean business plan becomes very suitable for SMEs and individuals because of its simplicity and can be done anytime.

3. Key Components of a Lean Business Plan

3) The details. The “details” refers to the appendices where a lean plan may or may not include business specifics including the who, what, where, how in market and principles behind leaders. Being optional and of great detail, the appendices may be a part of the plan that is developed over months or years as the business owner progressively has better innovative ideas and changes in business direction. This is the private part of the “pre-planning” that occurs off the plan.

E) Develop forecast and derive essential milestones. Investment in time during these steps is critical as these will be the figures that the success of the business will be measured against. PaloAlto suggests a top-down approach to forecasting whereby estimated results are squeezed out by estimates on deriving category of results or in businesses when there is some familiarity with the figures, could be bottom up. Milestones are simply events that can be planned and incorporated into a schedule. Too many specifics behind milestones can be wasted effort; too little and deviation from the plan may occur.

2) Strategy and tactics section followed by the specifics. While it may look barren, simply having this section can be more important than the contents themselves because it often leads business owners to think of the difference between strategy and tactics, which many may not understand. Strategy is your key goal, and often there is only one, which can take five years to achieve, whereas a tactic is a certain action implemented to achieve the strategy. Strategy and tactics may seem simple enough to the educated man, but this small lesson can slip the minds of even some of the most experienced business owners. A business owner must understand that all tactics and changes in actions can be linked to the strategy, or they must rethink the strategy. Written just above your implementation plan, this section will allow you to save time rethinking over the what, how, and why of your actions. In order to provide evidence here that forecasts can still be made in traditional format, PaloAlto suggests that a limited amount of forecasting can be used to set expectations for planning cash and rates of growth, but this will lead to sub D) Build a simple sales and marketing plan with specifics. This is, in fact, a follow-through of the last section, usually just specific tactics. Any confusion between steps and the order of their implementation could sabotage those steps. Devices like outlined pricing and messaging can ensure much that tactics are carried out as planned.

1) A one-page business pitch, perhaps the newest and most important section of the plan. Borrowing straight from the idea of the elevator pitch, this utilizes the old sales concept “Tell Them What You’re Going to Tell Them, Tell Them, Then Tell Them What You Told Them.” The business pitch is an overview of the company making it easier to refine and change the plan. If you can’t write the pitch, basis of the business, and why it is going to succeed, you probably aren’t ready to continue. Having to stop here and refine this may be the best money-saving decision a prospective business owner can make.

Well, what is it that a business plan must encompass? How long should it be? A lean business plan typically includes tactics, strategies, and specific activities and a schedule and it sticks to the facts as authors state “No guessing or forecasting.” While a traditional plan may be comprised of sixty plus pages, a lean plan is often one page, and rarely more than two. The key components are as follows:

Key components of a lean business plan

4. How to Create a Lean Business Plan

How to create a lean business plan? A lean business plan doesn’t have much difference from the normal business plan. The basic structure is the same, but a lean business plan needs to emphasize specific points like start, concept, product, entry barriers, target market, and competitive advantage. Lengthy description is much needed here. A lean plan needs to be concise and should fit on one page (or possibly two pages) for most businesses. It should be reviewed and revised often. It is a cycle of design, test, and revise. Build your lean plan as a document as it is needed, i.e. don’t go overboard in preparing a detailed plan when your business is unclear. A document can be a simple list or a table, but I think a business and its assumptions are better expressed visually. This is where you need to select the best medium that fits your situation. Lean Planning helps you to develop your business plan in a few hours at the kitchen table instead of days and weeks at the office.

There is no fixed content for a business plan. Different business experts may have slightly different views on the ideal contents of a business plan. But there is a league of business experts who advocate that the quest for startup capital (especially for early stage ventures) is a huge waste of time. For them, the planning process itself is of more benefit than the plan document. These business owners learn a great deal about their target customers, their business, and their assumptions when they systematically work through a planning process. So, I think for a startup, the planning process is more important than the plan document. This is where Lean Planning comes into play. Lean Planning streamlines the planning process, avoids wastage, and helps to make the business more successful. Co-founder of the lean startup methodology, Tim Berry, describes the lean business plan as a great way to think through the start to finish of building a business. Lean Planning is simpler and faster.

5. Conclusion

So we firmly believe the planning is vital, but that just the first step—planning—is not the end. This first step with a lean plan is simple, and this simplicity is the beauty of it. If this plan is done quickly and well, with the full attention of the business founders who are about to take a life-altering step. This effort will give the entrepreneurs a much better understanding of their new business, what they planned to do, and what the prospect might look like, then the run-of-the-mill business. With this mental picture in hand, they could decide the feasibility of the new business and whether proceeding with full-fledged planning and more resources is in fact a good idea.

We are strong believers in planning, but we also understand that in the early stages of a new, innovative company, all the planning in the world can’t take the place of quick, efficient, and responsive execution. We’ve seen businesses in love with their plans resist changing times and clinging to a plan that served them well in the past but is no longer appropriate. We have seen huge, weighty plans that were never touched after the initial effort to get the loan. We have seen people hate and despise the planning process because it is viewed as an end in itself, not in aiding the navigation of the treacherous waters of business.