Anyone considering starting a business should be able to answer a few basic questions about their new business. I recommend the Business Model Canvas as a way to help aspiring entrepreneurs achieve their goal of starting a business.
Creating a written business plan greatly increases your chances of being successful in your business. Doing this homework for your business requires you to think hard to determine, for example, if your assumptions are realistic.
The outline is a simplified version of a business plan. Its one-page diagram has nine cells: Customer Segments, Value Proposition, Channels, Relationships, and Revenue make up the left side of the canvas, which is customer-centric. The right side includes the key resources, key activities, key partners and cost structure – the “behind the scenes” part of the operation.
On the other hand, if you are looking for funding from an external source, then you will need to write a comprehensive 40-page business plan. It will help you answer many important questions, but you will have to do a lot of research – there is no way around it! But the more variables you consider, the greater your chances of success.
Many small businesses can get by with a simple one-page plan while testing their hypothesis to see if their business model makes sense. The Business Model Canvas is meant to change as you undoubtedly discover unforeseen twists and turns in your startup.
A simpler tool
Taking it a step back, there is another even simpler tool called Zero-Draft Business Plan for Startups, developed by my friend Bob Theis Jr., who holds an MBA from the University’s Wharton School. from Pennsylvania.
Why does he call it Zero Draft? “Everyone knows what a first draft of a plan is, but a zero draft is even before a first draft,” says Theis.
“I developed this Zero-Draft plan as a roadmap to the success of any business venture,” said Theis.
He has used the tool successfully with travel agencies, mortgage companies, real estate companies, engravers and restaurants. He also created a similar plan for clients who already have a business.
“If you can’t answer these basic questions, you probably shouldn’t be starting a business,” says Theis.
Zero Draft Business Plan Questions
1. Why are you starting this business? How did the idea come about? Who is involved? What are your origins? What is your background in this field?
2. What is your product or service? What is your sales geography? How does it work in practice? Why is this needed? Who said it was necessary?
3. Who exactly is your customer? Have you done a face-to-face interview with potential clients?
4. Who exactly are your competitors? Where are they located? What do they charge? (Attach a competitive matrix.)
5. What are the three things that make your product (service) really different from that of your competition?
6. How will you sell your product (service)?
7. How will you market your product (service)?
8. How much will you charge? Why?
9. What are your total sales forecasts for the first year (best case and worst case)?
10. Where will you get your products or materials? What are the costs of your product (service)?
11. For the first year, list your specific expenses (including salaries, rent, sales, marketing, accounting, legal fees, and other administrative costs).
12. How much money are you going to invest? How are you going to get the extra money if needed?
13. Have you considered buying an existing business that does 70% of what you describe above? Have you considered licensing your product?
Less is more
“I realized that by working with clients, sometimes less is more,” says Theis. “It’s important to have these basic questions answered before a business owner commits his personal funds. I have personally witnessed the same questions on several occasions. , whether someone is starting or buying a business. “
I asked Theis why he would use his Zero-Draft Business Plan instead of the Business Model Canvas.
“It starts the conversation,” he said. “It’s really simple, really basic and it’s easier to do. These are the minimum questions that must be answered. If the entrepreneur cannot answer these questions, he must keep his money in the bank.
Theis has seen several clients come to the conclusion that the numbers in their original plan weren’t working. Often times, they pivot and come up with a new plan that is workable.
Questions for clients who already have a business follow the same format as those for startups. Theis has used this tool successfully with many clients, both new and established in business.
The Zero-Draft Plan ends by asking the Entrepreneur to list three immediate action items with a start date for each.
Whether it’s the no-draft business plan or the business model outline, Theis emphasizes, “Having a written plan is essential to helping your business succeed. “
Dennis Zink is an Exit Strategist, Business Analyst and Consultant, Certified Value Creator and SCORE Mentor, and Past Chapter President of SCORE Manasota. Dennis created and hosts “Been There, Done That! with Dennis Zink ”, a nationally broadcast commercial podcast series and“ SCORE Business TV ”available on Time4Exit.com. He leads CEO round tables for the Lamantin and Venice chambers of commerce. Dennis led a SCORE team to create the Exit Strategy Canvas and Exit Strategy Roadmap program which provides a real world methodology for achieving corporate equity. Email him at dennis@Time4Exit.com.