Planning to start a business in Australia traditionally involves meeting with business advisors/gurus and filling out a business/marketing plan template. After completing a robust, comprehensive 40-80 page execution plan to launch the venture of their dreams, small business owners and start-up founders are filled with a sense of accomplishment.
These plans typically consist of:
- An executive summary
- A mission statement
- A company background
- A product or service description
- A marketing plan
- A competitor analysis
- A SWOT analysis
- A section on operations
- A section on financial planning
- A timeline/roadmap
What could possibly go wrong? Well, a lot it turns out!
Limitations of traditional business planning
This exercise can be useful, but it’s important to recognise all the limitations to this style of planning. These limitations include:
- The presumption that planning precedes execution
- Business planning by its very nature iterative, so a 40+ page tome doesn’t provide a lot of adaptability
- Missing sections on the digital component of the business
- Delving into too much detail too early in the planning cycle
- Easy to get wrong, can contain a lot of implicit assumptions
- Potential for the business plan to sit on the shelf and gather dust
Why doesn’t it work that well anymore?
In truth, this kind of business planning never worked that well. Now it’s even more challenging to get right due to:
- The advent of the digital age
- How cumbersome it is to review/update when undertaking pivots and micro-pivots
- Business conditions changing so quickly
- Channels and business models are subject to constant change
- Not very concise
- Not highlighting the most important aspects of your business model
- Inability to gauge how different aspects of the business are related
What affects how we approach planning?
We need to take a customised approach to business planning based on the following:
- Stage of the planning cycle
- Level of the founder’s domain expertise
- Complexity of the business model
- Level of understanding of one’s business model
- Level of model-fit
- Sophistication of founder/founding teams
- What facets of the business to focus on first
What is a more sensible alternative to traditional business planning?
My suggestion is to start with high-level/fundamental planning activities and getting the overarching business architecture in place before we progressively drill down into the details.
This means that most fundamental planning activity isn’t writing a business plan, it’s populating your Business Model Canvas.
What is a business model?
In general, the business model can be defined as a unit of analysis to describe how the business of a firm works. In other words, business models describe how the magic of a business works based on the individual bits and pieces.
Business modelling encourages small business and start-up founders to zoom out from their product/service to a venture level perspective.
What is a Business Model Canvas?
Here is my Business Model Canvas… don’t nick it 😉
The main components of the business model include:
- Key partners
- Key activities
- Key resources
- Key propositions
- Customer relationships
- Customer segments
- Cost structure
- Revenue streams
Making business planning easier
- Start with your most fundamental planning document(s) – i.e., the Business Model Canvas
- Have your Business Model Canvas reviewed by myself or an alternative Digital Solutions Strategy Advisor
- Ensure the Business Model makes sense at a high-level and has been ‘optimised’
- Commence with the more detailed planning exercises, if and as required. Other planning/strategy templates include:
The importance of undertaking business modelling
Through my work I find that most small businesses and start-ups don’t fully understand or haven’t yet clarified their business model.
Most of the few that have done their business modelling, haven’t quite got it nailed, which means they haven’t:
- Identified the holes in their strategy
- Leveraged their key partnerships to achieve differentiation, profitability and scale
Most small business owners and start-up founders would score 20-40% for their first attempt at modelling their business – which means that there is huge opportunity for improvement.
This is a widespread problem in the Australian small business and start-up ecosystem, which contributes to years of founders’ effort going to waste, which is not something I like to see.
If we are to mature as a business ecosystem, there needs to be a shift in focus from technical to operational, tactical initiatives and strategic interventions.
It goes without saying that businesses fall apart without regular strategic input on their underlying business logic (business model). This kind of ‘first principles analysis’ saves businesses and it saves livelihoods!
Business Model Optimisation (as a service)
We’ve developed a specialised, heavily subsided Business Model Optimisation service (as part of Digital Solutions), with the following aims & objectives:
- Educating founders on what business models are and how they work
- Prompt founders to populate their business model canvas
- We will review their business model canvas, marking up:
- Issues that need addressing.
- Massive opportunities to create value and scale
- Check that founders are partnering with the right key partners to make their venture commercially viable.
We’ve already had a dozen or so founders progress through this new flow that have found it very valuable. Check out some of the most recent testimonials on LinkedIn.
If you’d like to take advantage of this business acceleration-style service, feel free to send me an email at: [email protected]
OR book some time with me to discuss your business.
Equally, if you know anyone who could benefit from this service, please feel free to put us in touch!
It’s super collaborative, productive and fun!
Ongoing support and business acceleration
Through Digital Solutions you will get 3x 1-hour 1-on-1 sessions for us to collaborate on your Business Model for $44.
Once completed you will still have access to weekly workshops which drill deeper into different aspects of business modelling and tackle other more detailed strategy/planning activities as part of an ‘All-Access Accelerator’. I often describe this as ‘an assembly line for business model refinement and entrepreneurial growth.’
Tristan is a Business Modelling expert and one of our Digital Solutions advisors. Learn more about the Digital Solutions program and how it can help your business here.