Today I want to discuss and put out for the debate the merits and anxiety of developing business plans, especially for the start-up community. I want to speak about the alternatives, mainly the Business Model Canvas and the Value Proposition Canvas.
Who requires a start-up to develop a Business Plan? Generally, it is the financial providers i.e. the Banks, Venture Capitalists and public funders. You notice I did not mention Angel and private investors in this list, I will speak of this anon.
The creation of a Business Plan is a long and arduous task for any start-up business especially as they are trying to juggle many balls in the early days. They have to develop a document that can range from 20 pages to 100 pages generally covering topics like company description, market, sales, research, staffing, finance etc. The promotor has to do a number of business plan iterations before it is ready to be viewed by the readers. This may realistically take the promotor a number of months and guess what, as soon as it is printed it is out of date. Is this a really good use of early start-up companies time? Surely the early months are about market research and identifying potential customers.
The aforementioned Angel investors in most cases look at the promotor, opportunity and the product or service market fit. You could collectively call these items the Value Proposition. This is where the Business Model Canvas (BMC) / Value Proposition Canvas excel. These documents are one-pager that gives all the information required to understand a business purpose and opportunity. The documents are easy to populate and are always live and up to date. Business Model Canvas is now an integral part of the teaching of entrepreneurship in Universities and Colleges.
When reviewing a BMC I always break into three segments:
Desirability – Customers, Value Proposition, Channels and Customer Relationships.
Feasibility – Partners, Resource and Activities.
Viability – Costs and Revenue.
All three elements must exist and work together to create a business, if one element is not achievable then the business model does not work. This model is very graphically displayed on one page and easy for the reader and promotor to understand and discuss.
What are we looking for in a business – Always it is Customers and Opportunity? Therefore, which is the best and fastest way to identify these elements:
Business Plan or Business Model Canvas?
What do you think?
Prepared by George Bulman, Rubicon Centre Operations Manager
