The Business Plan

Many advocates of the Business Model Canvas argue that a business plan is redundant – a Business Model Canvas is all you need.

Steve Blank, Silicone Valley entrepreneur and “The Father of Modern Entrepreneurship”, sums this up with: “Business Plan: a document investors make you write, that they don’t read”.

Whilst I fully respect their superior credentials, I struggle to agree with the view that a business plan is unnecessary.

The Business Model Canvas is a hugely valuable tool, and presents a concise overview of your business intentions, but a business plan allows for elaboration and emphasis, depending on the purpose of the plan. The Canvas is a good tool for communicating your business model, but it needs to be explained in order to be understood, whereas a business plan should speak for itself and can be sent to the reader to digest prior to any further discussion.

I have worked with a few (non-tech) startups, and my first piece of advice is to start at the very end – establish your exit strategy. At what point do you leave the business, how will you leave, and why? Do you just want to create a personal income for the few years up until your children start school and you can resume your career? Do you want to sell the business as a going concern with a certain price tag and at a certain time? Do you want to float the business as a PLC? Do you want to hand the business over to your children? Is this your early retirement pension generator? Are you aiming to impact a social cause? This thinking provides purpose, context, an ultimate long-term objective to work toward, and helps them to see that the business plan is a significant subset of of their life plan, and that the two MUST be congruent.

I will then recommend the business plan guidance from The Prince’s Trust. It offers a good structure to build a comprehensive plan. Of course, it might be necessary to produce more than one version of the plan, with each tailored to its intended audience. For example, if you are building the plan for your own (and perhaps your team’s) direction and control purposes, you might want to emphasise the operational processes and the key performance indicators against which you will measure performance. On the other hand, if you are submitting a version of your plan to win investment, your plan is essentially a sales tool and so your emphasis should be more geared towards the financial health of the business, what an investor can expect in return, risk analysis, detailed financial forecasts (including forecast profit & loss accounts and balance sheets), return on investment calculations and ratio analysis – all to convince them that your business is a good and safe investment proposition for their money.