The Business Plan – Is it Time for a New Approach?
Lately, I’ve been rethinking Business Plans. On the one hand – in the consulting, finance, investor and academic world – what is meant by a Business Plan is a fairly comprehensive research project. It includes a thorough analysis of issues including customers, markets, competitors, pricing, marketing strategies, risks, which is always followed with detailed multi-paged financial projections looking three- to five years into the future. To create this kind of a Business Plan, management works on it for months or hires a Business Plan Consultant to do it for them. Either way, it’s not unusual to invest a hundred hours or more into creating it.
On the other hand, in most of the business world, what is generally meant by a Business Plan is a brief written statement indicating goals and overall steps for achieving those goals. The goals might relate to customers, sales, units sold, profits, facilities, etc. It looks out a year, maybe two into the future. This is something the owner or management puts together in a few meetings and then gets updated every year or two.
These are two very different meanings of the term Business Plan, and I’m beginning to wonder if both are missing the mark…
The comprehensive Business Plan isn’t all that practical for small businesses or non-profits that lack the time or Rands to do all that work, however valuable it might be to do so.
And the brief Business Plan can be very superficial to the point that it does little more than set ambitious goals with minimal guidance on what to do when the business encounters those pesky potholes in the road. Most importantly, the brief Business Plan will not be enough to present to investors as it does not contain all the information needed by these individuals and institutions, for example, a Business Plan presented to the IDC looks different from a Business Plan presented to an investment bank or Venture Capitalist.
So, here’s my idea for a third kind of Business Plan – for the South African market – taking the best of both worlds into account.
For now, I’m calling it the Business Model Navigator/Pitch Deck Hybrid Business Plan.
Keep it short and simple, but still useful. It involves doing “Just Enough” and “Just in Time” research, projections and analysis into “Just the Right Areas” that will matter for achieving success within the business. The “Just Enough” results are summarised into a 3-page Business Model Summary, then a 2-page Financial Projections Summary and then finally, a 5-Page Pitch that incorporates all the other important facets, e.g. management experience, target market, competitors and market size.
- Can this offer the best of both worlds? It just might.
- Will it attract investors? I don’t know, but I do know they’re more likely to read this version of a Business Plan than the 100-page variation.
- Will it be more affordable to new entrepreneurs? Most definitely!
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