Founders often approach business plans with trepidation. Expected to create a massive tome full of all the knowledge required to prove to investors that far from being a gamble, an injection into their company is a sure certainty for massive returns on the original investment.
Covering every part of the business, most entrepreneurs will find certain sections very difficult to write as it takes them out of their comfort zone and into areas that they intend to hire an expert to deal with once they have their funding. “What is the point anyway?” some entrepreneurs will think, “all we are going to do is make up some numbers to fit the hockey-stick growth we know the venture capitalists need to see to offer an investment…”
The business plan is seen as a worthless and massive hurdle by some innovators eager to progress their great idea. However whilst it need not be hundreds of pages long, when approached in the correct way, not only is it a relatively small hurdle, but a vital document to ensure that all the important components of the future company have been given their necessary consideration, that the founding team are all on the same page and that there is a clarity to both the vision and purpose of the enterprise.
When written at the correct part of a startup’s life, after much verification and validation has been performed with real customers, it also becomes far easier to write because rather than being a document based on guess built on guess stacked upon assumption and conjecture, it is possible to use real data and validated extrapolations.
However understanding how your company is going to make money is a vital activity to do from day one and regularly thereafter. One tool that is proving very useful is the Lean Business Model Canvas where the entire company can be condensed onto one piece of paper showing how the company should work, what needs to be done before taking the next steps and all the assumptions you have made that need to be tested. Just a few minutes of work can lead to some massive insights about how your business needs to operate.