Chapter 2: Lean Business Planning

“However beautiful the strategy, you should occasionally look at the results.”

– Winston Churchill

So we’ve seen in the previous section that using the term lean in business means focusing on what adds value and avoiding waste. It’s also about taking small steps and evaluating results often.

Why Lean Planning? What are the Benefits?

Who cares about planning? Who cares about business plans, lean or otherwise? Planning isn’t the point; the point is to get what you want from your business, to work smarter, not harder. It’s about better business. Get what you want out of your business.

Strategy is focus. Don’t do everything – you can’t – but do the most important things. Don’t try to please everybody – you can’t – so please the people who matter most, depending on what you want from the business.

Develop and execute tactics to make strategy real. Make sure what you’re doing matches what you think is most important. Figure out optimal pricing, channels marketing, and product (or service) developments.

Make sure you are actually executing your tactics by boiling them down to specific milestones and performance measurements. Track results and compare them to expectations. Develop accountability.

Manage your money. Figure out what you expect to sell, use that to figure out what to spend, and make sure you never run out of cash.

Lean business planning isn’t about planning. It’s about business. And getting things done. Run your business to make your life better. Don’t run your life to make your business better.

It Starts with a Lean Business Plan

Lean business planning adopts the ideas of small steps, constant tracking, and frequent course corrections to planning. It includes only what adds value, without waste. It starts with a core business plan for internal use only, just big enough for optimizing the business. A lean business plan has four essential parts:

  1. A strategy summary is a bare-bones description of strategy for management use only.

    PRRR Cycle lean business planning

    The PRRR cycle in lean business planning

  2. A list of the most important tactics is also bare-bones description, for management use only. It lays out tactics to execute strategy, like pricing, marketing, product or service development, financing, and so forth.
  3. Concrete specifics including review schedule, assumptions, milestones, tasks, and performance metrics. Milestones include dates, deadlines, and budgets. Tasks include responsibility assignments and budgets.
  4. Essential forecasts including sales, spending, and cash flow.

This lean plan is clearly not the “elaborate business plan” that lean startup experts reject. Unlike the elaborate plan, the lean plan doesn’t include carefully worded summaries or detailed business information for outsiders. It is not even a document. It’s a collection of lists, tables, and bullet points.

Keep it Live. Use it Well.

Just like lean manufacturing and lean startups, lean business planning is a process of continuous improvement. It takes small steps, analyzes results, and makes corrections. I’ve revised the classic PDCA cycle to make a lean planning version that I now call PRRR, for plan-run-review-revise. So lean business planning is more than just the lean plan itself. It’s the plan plus regular review and revisions. It’s never finished. Every latest version will need revision within a few weeks.

Add More Only as Needed

As much as the lean startup experts complain about what they call the elaborate business plan, real businesses, in the real world, do occasionally need to present a business plan to outsiders. They have what I call business plan events, when a business plan is required.

But times have changed. You still don’t need the big plan. Do your lean plan and keep it up to date with regular review and revisions. And when somebody asks for a traditional business plan (if they do), then add the extra ingredients you need. That might be a market analysis, maybe an exit strategy, maybe a detailed description of product or marketing plan. Do them as summaries, presentations, or appendices.

Lean Business Planning

 

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