A written business plan is the foundation for a successful business launch, major expansion or change in direction. But writing an effective plan can be a challenge, starting with the structure your plan should take.
What, you might ask, does creating a business plan have to do with human resources (HR)?
As you better define and understand your business and customers, you can:
- Optimize how you organize and manage your people to best achieve those business goals
- Identify areas where you might need to hire or train existing staff
- Ensure that each new hire is essential to driving business goals
- Help estimate personnel costs
- Better align your mission, vision, values and culture
A well thought out business plan is a critical tool in building and maintaining a top-tier workforce.
How to create a business plan using the Business Model Canvas
There are many ways to write a business plan, from a few notes on the back of an envelope to a multipage document with research, financial projections and extensive notes. Each approach can present pitfalls, however.
Jot down a plan with too little information and you won’t be able to operationalize your plan effectively. Turn your plan into a major research and writing project and you can get bogged down in the weeds.
One alternative is the Business Model Canvas. This is a one-page grid made of nine essential building blocks that executives and business owners can define to map their business plan. The building blocks are:
- Customer segments
- Value propositions
- Customer relationships
- Revenue streams
- Key resources
- Key activities
- Key partners
- Cost structure
The Business Model Canvas concept was developed by Swiss entrepreneur and consultant Alexander Osterwalder and Strategyzer.com as a way for businesses of any size to plan more effectively.
Advantages of the Business Model Canvas planning method
By defining each of the Business Model Canvas building blocks for your business, you can come up with a business plan that:
- Fits on one page
- Is easy to understand at a glance
- Is easy to update as circumstances change
- Fosters collaboration
- Keeps planners focused on high-level elements
Let’s look at each of the nine elements above in more detail.
1. Start with your customer segments and value propositions
To start building your plan, identify your customer segments and your value proposition for each one. Ask yourself and your team:
- Are your customers segmented or diversified? For example, if you’re starting a software company, you might be creating value for unpaid simple users as well as for paying enterprise clients.
- Who are your most important customers?
- What is the need you’re trying to satisfy for each customer segment?
- What products and services will you offer to provide that value?
2. Look at your channels
Once you’ve identified your customer segments and the value you plan to deliver, you can identify the channels you’ll use to deliver that value. Questions to answer for this element include:
- What channels do you customer segments prefer to use? For example, do they want software demos in person or online?
- What are the most cost-efficient channels? Following up on our software demo example, online will almost always be more cost-effective than in person.
3. Identify your customer relationship goals
Next, it’s time to clarify the kinds of relationships you want with your customers.
For example, do you want to be a resource they call on as needed, or a partner whose products or services they use every day? How will you establish and maintain those relationships?
4. List your revenue streams
When you know the value that you offer customers and the channels they prefer, you’re ready to consider revenue streams.
What are your customers willing to pay for the value you provide? What do they pay now for similar products and services?
Identify all of the individual revenue streams in your plan. Then try to quantify how much each of those streams will contribute to your overall revenue.
5. Identify your key resources and activities
List the resources and activities required to deliver value to your customers. Elements to consider include:
- The resources and activities you need to create value. For example, if there are raw materials needed to produce your product, what are they and where can you find them?
- The requirements of your distribution channels and customer relationships. Will you need a strong remote team to help customers set up and learn your software products online?
- The resources you need to support your revenue streams. For example, if you’re selling online, will you need fraud protection resources to safeguard your revenue?
6. Think about your key partners
Key partners can provide resources and activities that your organization can’t. Depending on your business, key partners might include:
- Suppliers that furnish your factory with raw materials
- Technical staffing firms that provide you with support team members
- Payment protection services that monitor your online store’s customer orders for fraud
With a list of partners that you need and what you need them to do, you can start vetting potential key partners.
7. Create your cost structure
With all the other elements of your plan in place, you can decide how to structure your costs. Cost-related issues to consider include:
- What are the most important costs inherent in your model?
- Which resources and activities will be the most expensive?
- Will your business operate on a cost-drive or value-driven model?
How long should it take to write your business plan?
The exact timing for how to create a business plan will vary depending on the complexities of your customer segments and your industry.
Many executives and owners can develop the first draft of their plan using the business model canvas in a few hours with a facilitator.
What do you do with the first draft of your business plan?
After you work through the above steps, you’ll have a solid first draft of your business plan. That initial draft is not the final plan, however. It’s a roadmap you can consult and update as you test your assumptions about your customer segments, value proposition, channels and other elements of the draft.
With the Business Model Canvas method, the next step is to fill in the details on your value proposition. Here’s where you can:
- Assess in more detail your customers’ needs and pain points.
- Spell out your process for solving those pain points.
- Start thinking about how you’ll operationalize your plan.
Make your people part of the plan.
Your people are foundational to the success of your new plan. They’ll implement it and measure your progress.
That means you need to look at each of the nine elements in your plan and make sure you have the right people in those roles to succeed.
For example, if one of the most promising customer segments for your business is in another country, do you have sales, service and marketing employees who speak the local language?
Or, if you’re pivoting from in-store to online retail, does your IT department have the skills and experience to create a great digital customer experience?
If you have talent or skills gaps in any area, you’ll need to fix them to implement your plan.
Does your plan need change management?
Managing change in an existing organization can be a key activity. If you’re creating a new plan for an existing business, think about the change management resources you have.
- Do you need to bring on new talent to help you and your people execute your pivot?
- Could key partners consult with you on implementing your planned changes?
- Keep in mind that changes need support from the top and buy-in from management for your plan to succeed.
Are you ready to learn more about starting or adapting your business successfully? Download our free magazine: The Insperity guide to business performance.