However, having a business plan document can also be useful to define the goals of a business project even if we are not looking for investors and we want to bootstrap the business. Here we will summarize some documents that can be really helpful for any entrepreneur or Lean Startup looking to be agile in their business definition.
David Linn Posted in ArticlesStartups Steve Blank writes about meeting two sets of former students, both in fairly similar places as far as age of company and business planning canvas. One had found itself stymied in their funding phase and feeling as if they had wasted significant time getting to the phase.
The other was setting up a meeting with Blank to get his advice on which of several funding offers they should take. What was the difference between the two? The first group, the group finding itself stuck, had spent four months writing a page business plan with 12 pages of spreadsheets. They prepared a 15 slide presentation and were ready to go pitch.
However, once they got their product to actual users, they realized that at least half of their key assumptions were wrong. The second group, the group about to be funded, decided not to spend time writing a detailed business plan. Instead, they focused on building and testing their business model.
A business model is best presented through a business canvas which is usually only one page and illustrates how a company creates, delivers and captures value by presenting the interactions between the different parts of the company.
What is the difference between a business plan and a business canvas and how does that difference change the success possibilities of a company? The obvious difference is the level of detail.
This static-dynamic difference has a practical difference in the time spent producing the documents as opposed to building the business; the time spent justifying assumptions versus testing and tweaking them. A great deal of time is spent justifying the assumptions of a business plan. The typical business plan plots economics through five years and even though there is a ton of guess work here, a business plan goes to great lengths to back those assumptions up.
The business canvas spends a lot less time trying to back up assumptions since it realizes that they are just that, assumptions. Instead, it is focused on making broader assumptions or hypotheses and quickly testing them so that they can be confirmed or adjusted.
There is also a significant philosophical difference created by this static-dynamic difference. The business canvas, on the other hand, is supposed to change. That aspect puts you in the mindset that we are just getting started and moving through a process.
In a business canvas change is expected and welcome. A business plan is a finished document, a business canvas is the first step in perfecting the business.
The business canvas offers a business greater flexibility and creates a betterment philosophy.
Certain investors will want to see a more formal business plan and it might be important for a business to get to that level of financial detail. However, to quote Steve Blank: Unless you have tested the assumptions in your business model first, outside the building, your business plan is just creative writing.The Lean Startup business plan, referred to as "the canvas," is a living breathing document confined to one single page.
The Business Model Canvas and the Lean Canvas are leading examples of widely-used business plan templates that help you apply Lean Startup principles into a one-page business plan.
You can use the canvas to describe, design, challenge, and pivot your business model.
It works in conjunction with the Value Proposition Canvas and other strategic management and execution tools and processes. The short and complete business plan that gets you going with ease - even if you hate planning! 1-page business planning Replaces long and boring business plans with a 1-page Lean Canvas that gets read.
It is adapted from Alex Osterwalder's Business Model Canvas and optimized for the Lean Startup methodology with a big emphasis on finding customer problems worth solving.
Download this free template to quickly document your business model on a single page.
Developed as an alternative to the Business Model Canvas and the Lean Canvas, our Lean Plan Template makes it easy to sketch out a one-page business plan and quickly test out new ideas. The Business Model Canvas is a tool which provides a structured template for business planning.
The model was first proposed in by Alexander Osterwalder and it has grown in popularity over recent years.