The drastic increase of small businesses in the United States during the previous five years prompted the business community to rekindle the idea of lean business plans. While having all these start-ups is commendable, 45% of them fail after five years.
The key to a successful business, large or small, is having the right idea at the right time and creating a viable business development plan to fill that market niche. However, most entrepreneurs don’t write business plans. They hesitate to write a voluminous traditional or formal business plan that covers 30 pages and has layers of operational complexity and multi-year income statements.
A lean business plan is an ideal solution for the problem.
Traditional Business Plan VS Lean Business Plan
Traditional business plans are written for start-ups that have multi-million dollar revenue goals and require large amounts of seed funding for a large team and office spaces that keep the business running until it turns a profit. Investors want to know the potential market share, the founder’s experience, and how their money will get spent. Hence, the 30-page masterwork loaded with graphs, charts, and numbers takes three months to create.
However, a lean business development plan is more effective for small to medium-sized business (SMB) because it focuses on the key elements of the company. You will give a traditional plan a huge haircut by writing a lean plan that outlines your start-up idea, what market problem you are solving, how you will solve it, how much money you need, and when you will break even.
Why Lean Business Plan Methodology Is Gaining Popularity
The Small Business Association (SBA) encourages entrepreneurs to build a lean business development plan first, even when thinking about writing a traditional plan later. This approach helps lean start-ups organize their concepts without getting stuck with unwieldy traditional plans that often discourage writing a plan at the beginning.
Start-ups usually fail for six reasons. However today, entrepreneurs have access to a huge variety of resources than ever. Digital libraries, web-based apps, mobile solutions, and government agencies like the SBA provide a strong ecosystem for new companies.
These invaluable support systems often reduce the need to write traditional plans for SMB start-ups. It is because extensive data stores are a click away that can assist entrepreneurs and potential investors to validate any business model.
Benefits Of A Lean Business Development Plan
Lean business plans continue to gain popularity for these important reasons:
- Accessibility: Lean plans are relatively easy to formulate and understand. Anyone with basic business know-how can discern the unique selling proposition (USP) and unique value proposition (UVP) without being a former CEO.
- Speed: A lean business plan only takes three to four days to write. It requires only four to five pages to complete. As compared to a traditional plan, this lean plan approach moves at light speed.
- Flexibility: A lean plan allows you to organize the business idea and summarize the UVP and USP in short, easy-to-digest thoughts, which can be changed when new information and investor inputs are presented. It can be upgraded to a traditional business plan later if needed.
The Major Components Of A Lean Business Plan
Since you are writing a lean business development plan, you will be delighted to learn that such plans still have all the essential elements of a traditional plan. So, this again makes it an excellent foundation to build on later as you grow your business.
- Business Model: There is no way around this key requirement. Everyone, especially you, must understand the business model you are starting to make a profit (e.g, manufacturing, retail, free-for-service, etc).
- Strategy: This describes how your company will solve a problem or address a market need or how it differentiates from competitors.
- Tactics: Outlines the operational steps necessary to manage sales, marketing, and business objectives.
- Schedule: Explains when your business starts operations, where it is located, when it expects to break even, and when it is profitable.
- Income/Expenses Statement: Summarizes the sales, revenues, and expense projections for one year.
What To Include In A Lean Business Development Plan
The value of “lean” means describing these elements in a few clear and short sentences. Write only one paragraph per subject.
- Overview: Describes your company’s mission.
- Problem: Shows what problem you will solve or market needs.
- Solution: Outlines how you solve the problem.
- Target Market: Defines your market and customers.
- Competition: Identifies competitors and what makes your company different.
- Marketing: Explains how you will reach customers.
- POS/Sales Channels: Outlines where you will meet customer needs.
- Revenue: Shows how you will make money.
- Expenses: Summarizes business costs and ongoing expenses.
- Milestone/Growth: Projects timelines for achieving business goals.
- Partners/Resources: Indicates your business relations and professional assets.
- Talent/Roles: Identifies the team, relevant experience, and types of expertise you still need.
How To Write A Lean Business Development Plan
Since you now understand the essential elements of a good lean business plan, these links provide great apps and resources to help you write a lean business plan document.
- Hoshin Planning Process: Outlines a step-by-step thought process necessary to develop a lean business plan.
- SBA Guide to Lean Business Plan: Shows how to write a lean business plan.
- What It Costs to Start a Business in 2022: At bubble.io, the community offers exceptional tips on what it costs to commence a business.
- Emerald Insight: Provides awareness on what kind of business plan to use.
- Startly: A one-stop service that offers enhanced time and expense solutions.
Important Next Steps:
- Add An MVP Summary:
A start-up that plans to sell a new version of a contemporary product should consider including a Minimal Viable Product (MVP) summary. The MVP protocol is a significant testing and engineering process. It ensures that a prototype gets the right development and testing prior to release.
The MVP methodology works well with the lean business philosophy. It is because this method improves the development of contemporary products rather than starting from square one.
- Get Funding: Once you have a firm lean business plan, you will be in a great position to look for funding. At bubble.io, the community can show you how to get seed funding.
- Getting Started: Like the present, there is no time to start building your dream. This is your Call To Action (CTA): wake up, get up, and start-up today.