Stop planning - find your business model
For decades, from?start-ups to the largest of companies, the story has been familiar;?to launch a business?you need a business plan. ? Business Planning experts and academics tell us?the?lack of a?business plan, or the missing ingredient, leads to?business?failure. ?To avoid failure the?best universities?structured?MBA courses to develop the?skills?needed for business planning.The finished business plan is a document budding entrepreneurs and managers can be?proud of?and they should should be. In a whopping 30-40 pages the plan proves?an idea (hypothesis) can be?a viable business. ??Research backs up the pages of assumptions?and you have what it takes to execute. You have a?mission,?vision, ?product, marketing and human resources strategies. There is even a??5 year?financial project that show?how every dollar and cent will be made then spent. What could?go wrong?Trouble is a huge problem is brewing.?Every business begins as a hypothesis and the plan is?built on series of assumptions to prove that hypothesis without evidence will work. ?Imagine a scientist just telling us a mentor is heading our way without evidence, would you believe the scientist. This is what you do with?a traditional business plan. ?This is why business plans are?often proved wrong?when, and if?the business gets its first customer.Think about it,??hours if not months of time spent in a room researching, planning and strategising. ?All of it?wasted so early in the business' life, if the business even gets a product to market.Why?do so many business plans fail?
1. What is a startup
Before?you learn how to?solve the business plan problem a basic understanding of what a startup is, is important. ?Check out this video from the Kauffman FoundersSchool.
According to the definition given by Steve Blank, a startup is a temporary organisation founded to search for repeatable and scalable business models.??Startups in the traditional sense are small groups of individuals (founders) who come together to search for the business model. ?But startups can often be found inside larger organisations where innovation and new product groups are formed. ?They may have the backing of larger businesses and a better understanding of their customer, but the principle is still the same.
2. How to search for a business model
The answer sits with?Lean Startup Methodology and The Business Model Canvas.? Used together?these are?powerful tools that?help bring products to market. ?With these tools you will test your hypothesis and?gather evidence needed to turn a startup into a business.
The Lean Startup
The Lean Startup method?reminds us that a full working product is unnecessary on launch day. ?Instead?smart, lean startup?businesses develop a?Minimum Viable Product (MVP). ?MVPs are products that are missing all?the features of the full product,?but contain enough features to?attract customers. ?MVPs are designed to?test?a hypothesis and gather the data needed to make an informed decision to continue adding features or pivot.The Lean Startup Method?gets you out of the room. ?You are shown?how to survive without large sums of capital and learn from your customers. ? To learn more about the Lean Startup Method, check out this short video from LaunchSpark Video:[embed]https://youtu.be/_a3s0IXSuxY[/embed]
The Lean Startup method was developed for technology businesses, however, businesses outside have adopted the method. ?Tesla Motors in the US is a great example. ?Telsa, an electric car company owned by PayPal founder Elon Musk,??develops cars using the Lean Startup methodology. ?Tesla develops cars that are considered?MVPs, releases these to a select group in the market,?gauges demand?and refines the vehicle based on feedback.
Develop an MVP and you are away -?not quite, the?need?for a repeatable and scaleable business model remains. ?To?help with the search,?Alexander Oserwalder, developed the?Business Model Canvas.
The Business Model Canvas
The Business Model Canvas is a tool and process that helps startups?prove?hypothesis and search for a scalable and repeatable business models. The Canvas is a simple one-page business planning tool that adjusts as you learn.??Checking out this short six part series for a great introduction to the Business Model Canvas from?Strategzer.com:[embed]https://youtu.be/wwShFsSFb-Y?list=PLBh9h0LWoawphbpUvC1DofjagNqG1Qdf3[/embed]
Next time you have an idea for a business stop?procrastinating, create?an MVP and search for a business model with the?Business Model Canvas. You will quickly discover if you have a great idea.
3. Tools to help you find a business model
Leanstack?is a great tool?that will help you put together your Business Model Canvas.
Just remember, a startup is a temporary organisation that you form to search for a repeatable and scalable business, these are powerful tools to get you?out of the room and into business.?Once the search is complete,?its time for the business plan.