by Contributing Author
There’s no question that having a business plan is important — especially for companies seeking any kind of external funding or approval. After all, potential investors, employees and others need to understand your current performance and future projections to decide whether they want to buy in.
However, lately there has been a shift in how many companies are approaching business plans. Long, static plans are no longer as agile as they need to be to keep pace in our modern age. Imagine handing a busy investor a business plan containing 25 pages or more! It’s unlikely anyone has time to absorb so much information on a deadline — not to mention it becomes a hassle to update it to reflect your constantly changing and growing business.
A new movement has emerged in which the lean business plan leads the way. Here’s more on how to craft one.
The Ethos Behind Lean Business Planning
At the heart of lean business planning is trying to say more… using fewer words. In this format, a few well-crafted bullet points will serve you better than even the most well-written block of text outlining every imaginable detail of your operations. A traditional business plan will plunge into detailed descriptions of every area of business. This is a no-no in the world of lean planning, where the goal is instead to emphasize and summarize key points.
Another major component of lean planning is the ability to measure and course correct more frequently than you’d see with traditional plans — which often stay in place for months if not years due to their sheer volume. The lean mindset means accepting that you’ll need to adjust as you go and be able to update your plan accordingly, so it reflects the most recent metrics available. This approach can ultimately help entrepreneurs keep their strategy and performance at the forefront of agile decision-making using a lean plan as an ongoing guide.
As one expert writes for Entrepreneur, lean doesn’t mean scrawny or unhealthy; it means “healthy, muscular and efficient.”
What Should a Lean Business Plan Contain?
According to the U.S. Small Business Administration, these abbreviated plans focus on a few core attributes of the company:
- Tactics used to execute on strategy
- Milestones and check-ins for progress
- Necessary forecasts (sales, revenue, cash flow, etc.)
Another way to think of the lean business plan is to convey what your company plans to do, how you plan to do it, when you plan to take each action and what you expect to happen.
Even within the universe of lean business planning, there are different variations of exactly what a plan should contain. One expert recommends focusing on five core areas when crafting an abbreviated plan: the problem your company solves, its target market, its product/service offerings, its unique value proposition and its revenue and expenses. You will notice many of these points overlap to some degree with the core points laid out by the U.S. Small Business Administration.
This just goes to show there’s no single “right” way to craft a lean business plan, because what works well as a dynamic document for one business may need adjustments to work for another. As long as you understand the core philosophy of lean business planning, then you’ll be able to create a plan that reflects your company’s most important attributes to all who peruse it — inside and outside your company.
Lean business plans tend to emphasize strategy, actionable methods, performance milestones and financial projections above all else. You really can’t go wrong focusing on these core areas.