A lean business plan process is not a long boring formal document. It is not the traditional document, daunting to do, required for some business plan event. It’s not a document, it’s the first step in the process. It’s what’s going to happen, when, and who’s responsible. And how much money out, how much in. And how it will be tracked, reviewed, and revised. It’s planning, not just a plan.
“The plan is useless; but planning is essential” — Dwight Eisenhower
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You start with a lean business plan, just big enough to steer the business, to meet the need. It’s about results. It’s about managing a business. Accountability. Metrics. Priorities. It starts simply and grows organically. It gets reviewed and revised regularly. The first plan is step one in a planning process that includes the plan-run-review-revise cycle and goes on as long as the business does.
A lean business plan is never done. If the lean plan is finished, the business is finished. — Tim Berry
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With lean business planning, the plan is only the latest version. It is constantly being reviewed. Planning process is what matters.
A good business plan has a shelf life of a few weeks.
What we call a business plan event occurs when a business needs to present a business plan to outsiders. Seeking investors is a business plan event. So are applying for commercial credit, taking on partners, estate planning, and even divorce settlements. There are dozens of business plan competitions held around the world that offer prizes and awards for business plans. These too are business plan events. If you were one of the students to whom I taught entrepreneurship from the late 1990s to 2009, then your business plan event existed because you couldn’t pass my class without doing a complete business plan.
Form Follows Function
Most formal business plan documents have all of what we’ve already done, plus disclaimers, disclosures, a table of contents, executive summary, descriptions for outsiders of the company, products or services, market analysis, management team, and financial projections including the basic numbers plus projected income (profit/loss), balance sheet (assets, liabilities, capital) and cash flow. Traditionally they are printed and bound documents, but lately I see almost entire plans produced as electronic (PDF) documents. Actual printed pages are rare.
While the plan is still the plan, the business plan event will usually require dressing it up to deal with the special occasion. The formal document is the output of the plan, not the plan itself; it’s required by the special occasion. So too, as needed, the slide presentation for live pitching, the summary memo, and the elevator speech. These never work instead of the plan. They are outputs of the plan.
And of course, the nature of the event — what’s the business need, who is this for, what do they expect — changes the details of dressing the plan.
For example, a business plan for seeking investment from angel investors or venture capital needs to have the standard formal plan contents with emphasis on scalability, growth potential, defensibility, management team, and possible exits.
More info: 10 things I look for when reading a business plan; 3 Absolute must-have qualities for angel investment
And the plan supporting a commercial loan application usually needs to include personal financial statements and more detail about assets, collateral, payback potential, and past credit.
Change is Constant
Furthermore, in all cases, recognize that even the formal business plan documents have evolved a lot in the past few years. When I started with business plans in the Silicon Valley in the early 1980s, they were huge. Investors actually pored over plans looking for details. And people thought plans would last for six months to a year.
Nowadays, although it’s still a formal business plan, everybody agrees that business plans should be short and concise. Key information has to be there, but bullet points are encouraged and business tables and charts are vital.
Also, everybody understands that even formal business plans are good only for a few weeks. They can’t get stale.
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