Stage 2: PLANNING MY BUSINESS - BUSINESS PLAN & BUSINESS MODEL CANVAS
*“A goal without a plan is just a wish.” * - Antoine de Saint-Exupéry
“Without a plan, even the most brilliant business can get lost. You need to have goals, create milestones and have a strategy in place to set yourself up for success.” Yogi Berra
What is a business plan?
A business plan is a written document that describes in detail how a business defines its objectives and the roadmap of achieving its goals. A good business plan guides you through each stage of starting and managing your business.
Why write a business plan?
A business plan can help you organize the market research, develop an effective strategy, create goals for your business, determine financial needs and attract investors and funding sources.
Business plan Basics
- Executive Summary – a brief description of your business plan mainly includes the business idea, the mission statements, short description of the products or services you are offering, what is the unique selling point (USP), what is the funding request and the financial projections.
- a Unique Selling Point (USP) answers the question what makes a product/service/brand superior to its competitors.
- Company Description – it includes key information of the business, goals and target customers. By stating the strengths and competitive advantages, you showcase why your company is different than competition.
- Market Analysis – what is the industry and the market you are planning to enter. The market analysis should help readers understand how your competitive advantages respond to the market needs, so as to visualize the target customers and the potential of the whole venture.
- Competition – it includes a clear comparison of your business vs your direct and indirect competitors
- Management Team – how your company is set up. It should include skills and roles of the team members. In case there are any needs that are not covered by the existing team, state that.
- Products or Services Description – detailed breakdown of the products or services you are offering, how much they cost and how much money you are projecting to bring in.
- Marketing Plan – how are you planning to sell your products or services; break down the steps you will take to promote and the budget you will need to implement the marketing strategy.
- Financial Plan – based on your market research, state the financial goals and expectations. How much revenue do you project to have in the first year and the earnings during the second, third, fourth and fifth year of operation.
- Funding Request – if you need funding, state how much you need and how you plan to use this money.
- Milestones – what steps you have achieved till now and what are your plans from now on.
What is a business model?
A business model is defined as a plan for the successful operation of a business, identifying sources of revenue, target customers segments, products/services and financial details. It essentially connects the key drivers of a business. There are basically 4 types of business models; manufacturer, distributor, retailer and franchise.
A) The manufacturer business model utilizes raw materials to create a product.
B) The distributor business model refers to those companies that buy products directly from manufacturers.
C) The retailer business model refers to companies that sell products to customers.
D) the franchise business model refers to business that use the trademark, the branding and the business model of a franchisor.
The Business Model Canvas
The use of a business model canvas provides a way to create a clear business model using just one sheet. A business model canvas helps founders as well as future readers, such as investors, to understand how our business works and how does it efficiently make money. As it is customer focused, the business model canvas shows connections between key drivers of our business such as financials, marketing actions, customer segments. Once it is done, it is an easy way to communicate your business.
Value proposition – What customers’ need(s) do you satisfy and why do they buy from you?
Tip👉: Simply answering the question why do customers buy for you, what do you deliver?
Customer segments – Who are your customers?
Tip👉: Customers do not exist for you, you exist for your customers.
Tip👉: Many businesses serve just one customer segment.
Channels – How are your products or services delivered to the market?
Tip👉: Ask yourself how your customers want to be reached
Tip👉: Are you using your own channels (such as websites, social media pages, store) and/or partners’ channels (wholesalers, google ads)*
Customer Relationships – How do you get, keep and grow your customers
Get – how do customers find out about you
Keep – excellent customer service
Grow – how do your customers spend more? For example, sending newsletters
The easiest way to answer all these questions is to go through the entire customer journey in details, starting from how they find out about you (point zero) to how they decide to check on your products, how they buy your products, how they receive your products and how you communicate with them after they made their purchase.
Revenue Streams – How does your business earn money?
Key partners – What relationships do you have with other businesses or entities to make your business model work? These can be suppliers, manufacturers and/or business partners.
Key activities – Wha_ strategic activities does your business implement to deliver your value proposition?
Key resources – What strategic resources does your business need or have?
Cost structure – What main costs does your business have?
Here’s an example of a completed Business Model Canvas made for a bakery.