Lean Business Planning: The Modern approach to Write a Business Plan
Planning is essential for any business to attain success and sustain itself in the market. Traditionally, the goal was to formulate a business plan that lasts and works in the long run. However, this conventional way of creating a business plan isn’t flexible and doesn’t provide much room for improvement over time.
In an ever-changing business environment, you need a plan that can adapt to your changing needs and not hold you back with its rigidity. This is true especially when immediate actions are needed.
To facilitate the convenience to make modifications, a new method of planning has surfaced. This is called a lean business plan. This simple yet effective method of planning a business reduces the hassle of dealing with complicated documents—all while increasing efficiency and productivity.
What is Lean Business Planning?
A lean business plan is essentially a one-page business plan for companies to kickstart their businesses. Contrary to the traditional business plans which are often bulky and complex documents, a lean business plan is a simple, reader-friendly, and easy-to-make document.
It is a streamlined core plan that acts as a basis for a more elaborate one.
If you want to skip the trouble of creating a plan from scratch, a lean business plan template can help you save a couple of hours. If done right, a lean business plan can guide you to reach your goals, keep track of your progress, and manage cash flow.
Why Choose Lean Business Planning?
A lean business plan is similar to creating a map with steps laid out to run your business. It is favorable compared to a traditional plan because:
It’s faster: It contains summaries rather than detailed processes in each section of the plan. Consequently, making it a simple process that you can complete within minutes—saving you time.
It lets you stay up-to-date: It’s flexible and hence easier to update. As your business starts to expand, your goals and strategies need to be modified accordingly.
It’s concise: Conventional business plans are often too detailed for their own good—making it hard to interpret them and draw out actionable results. A lean business plan is simpler, shorter, and smarter.
Steps to Create a Lean Business Plan
Now that we have the ‘what’ and the ‘why’ out of the way, let’s take a look at the ‘how’. Here are the 5key steps to create the perfect lean business plan for your company:
- Lay the foundation for your business plan
- Put your ideas to test
- Review your results
- Revise your plan
- Set to launch
For your reference, we’ve created a simple one-page business plan for a barbershop business:
We have used a lean canvas to fit your plan on one page.
Step 1: Lay the foundation for your business plan
The first step is perhaps the most important one. It includes jotting down everything that your business is and does. Here, you summarize who you are, what you do, and how you do it. The plan can also include your target customer base, your goals, your team, and how you schedule tasks.
The foundational aspects of your business plan include:
- Strategy: Define the actions you will take to achieve your long-term and short-term goals
- Tactics: Describe how you use the resources available to implement your actions
- Execution: Specify how you will implement them
- Business model: Explain how you will generate sales and profits
A strategy is the brain of your business. It encompasses the core identity of your business and the steps you take to run it. Here, you write your plans of action in simple and precise statements. This includes:
- Business identity: Here, you need to describe who you are and how you want your customers to identify you. This can include your business philosophy, company history, and mission and vision statement.
- Problem: Specify the problem that your customers are facing. Try to be as specific as possible with the claims you make. It is vital to understand that a business's success depends on its reliability to solve its customers' problems.
- Solution: Mention the solution to the problems you are tackling with your product. It’s important to note that your ultimate offering to the customer is not the product itself, but the benefit that it gives.
- Market: Your brand identity determines which market you operate in and who your target audience is. To get a clear idea of who your ideal customer is, you must understand their values and priorities. To do so, it is advisable to create a solid customer profile first before you think about allocating resources to marketing.
- Competition: It is necessary to keep a close eye on your competitors. In this step, you list down your top competitors, their USPs, their market share, and most importantly, how you are different than them.
Tactics are the key to implement your strategies. They're primarily all your plans and marketing techniques to steer your business toward growth.
- Sales channels: Simply making a great product isn’t enough. You need to make sure that it’s actually reaching your customers. For this, you need robust sales channels. This can include walk-in stores, online retail outlets, and even both. You may also list down whether you want to work with distributors or go solo.
- Marketing activities: Marketing is non-negotiable for any business. After all, what is seen is sold. This is where you will list down your marketing strategies to draw customers in and inform them about your product and persuade them to buy.
- Partners and resources: If you have business partners that manage or finance the business, mention them in this step. You can also add any key resources that you use for running the business.
- Team: Mention the key team members in this step and their respective roles. If you don't have a team yet, you can write down the primary roles crucial for your business and later recruit relevant talents.
Strategies and tactics are wasted efforts without well-defined execution. Everything you have learned in the previous sections will not convert into growth unless you have a systematic assigning of tasks and deadlines.
- Schedule: It is essential to keep a timeline of all the events taking place in your business, along with a roadmap of all future activities. Review your schedule regularly to keep track of what's working and what’s not. Making changes ensures that you don’t deviate from your goals.
- Assumptions: Assumptions are needed so you have some ground to make decisions. Without them, your team will have a hard time figuring out new strategies. Listing the assumptions you’ve made about your business ensures that everyone is on the same page.
- Milestones: Milestones are the achievements you aim to make with your business plan. They act as indicators that a plan is working. On paper, they might look like just to-do lists with deadlines, but they help track your progress and tackle standstills.
- Metric: There are several metrics through which businesses measure their success. Some of the fundamental metrics are sales, costs, expenses, and more. You can tailor this to your company and write how you want to judge your business’s performance.
A business model is a description of how your business will make money. The clearer this description is, the better. A sloppy business model is a recipe for wasted resources, time, and can lead to liquidation.
- Forecast sales: Forecasting your sales means making educated guesses about your sales performance. It need not be 100% accurate. Here, you write how your business will create sales in the future. As hard as it may sound to play the guessing game, forecasting is important to compare expected sales to actual sales.
- Budget expenses: Estimating your future expenses and costs is essential to good management. Budgeting and regularly reviewing it helps you understand where you need to cut costs or increase investments to reach your milestones.
- Cash flow: Cash flow refers to the net inflow and outflow of cash in your business. Keeping track of it helps you foresee when you might run into a cash deficit or a cash surplus. You want to stay away from extremes. This assists you to manage your sales and expenses accordingly to maintain a good ratio.
Step 2: Put your ideas to test
After having your strategies made, milestones set, schedules in place, and a tactical plan to get your business up and running, it is time to test their utility. This helps reduce risks, gain insight, and avoid inefficient use of resources.
In this step, you verify the integrity of your business methodologies via extensive research. One of the best ways to do so is by surveying your target customers directly. Record their responses and compare them with your assumptions.
- Is the problem you are solving synonymous with the problem your target customers are facing?
- Does the solution you provide align with their expectations?
- Is there a solution you can provide that your customers don’t yet know they want?
- Are the sales channels you decided apt for your potential customers?
- Are your marketing techniques persuasive enough?
Asking all the above questions will give you a detailed view of what should be revised and what needs to stick.
Step 3: Review your results
The next step is to examine your results. After having put your ideas to test, you must have received some significant outcomes of your decisions. This is your data. You will use this data to figure out what went wrong with the last plan and come to conclusions.
You can review your results by using the same measuring metrics that we talked about earlier. It is important to choose reliable metrics that suit well with your business model. Opting for metrics incompatible with your business can give inaccurate results—making it harder to evaluate your performance.
Step 4: Revise your plan
One of the best things about a lean business plan is that it’s not set in stone. In other words, it’s a flexible plan and is open to continuous refinements as you go along with your business activities. Considering everything you have learned so far, this step is where you revise your lean business plan.
It includes making changes to your assumptions, sales channels, marketing techniques, schedules, budgets, and even your target customers as your business continues to evolve over time. The more mistakes you detect and revisions you make, the more reliable your lean business plan becomes.
Step 5: Set your business to launch
Now that you have a complete lean business plan in hand, one that is tested and refined, all you need to do is set your business in motion. Keep in mind to come back, revise, and keep updating your business plan as and when required. Usually, for most businesses, a lean business plan is all you need to get started.
However, sometimes a more detailed business plan is more suitable for large-scale businesses. This could include specific steps and instructions for your team to undertake complex operations and perhaps even comments for your investors. In case that’s your requirement, this business plan checklist might help you stay on track.
Creating a business plan is often a difficult and tedious task, but it doesn’t have to be. With the above-mentioned steps and guidelines, you can create a lean business plan that’s right for your company. This compact, tailored, streamlined, targeted, and easy-to revise document is sure to get your business up and running in no time.