No business plan should be written in stone. Business conditions are always changing, the marketplace is always in flux, and your lean business plan should reflect these changes.
But lean “doesn’t just mean thin,” says Tim Berry, president of Palo Alto Software, Inc.
Berry argues that a lean business plan, like a lean startup, can be executed more efficiently “by continuously measuring progress and feedback.” A lean business plan “requires rapid changes and fact-based decision making.”
Berry offers five guidelines toward a truly effective lean business plan.
Strategy Must Be the Heart of the Business Plan
“Strategy” means an unerring focus on specific target markets. What strengths or characteristics link your business to preferred customers and the solutions you offer them? Strategy should be outlined in bullet points, with charts and/or images. Why? As Berry says, “Strategy isn’t text—it’s concepts.”
How closely does your current strategy statement describe your specific value proposition? Is the strategy specific enough to facilitate successful implementation?
Less Complexity, More Summary
According to Berry, eight core concepts serve as the foundation for a successful business plan: Market, product or services, production, marketing, sales, distribution, management and finance.
Old school (or “fat”) business plans offer elaborate descriptions of each key area, whereas a lean business plan summarizes trends and assumptions, “explaining them in detail only where the detail isn’t already understood.”
Again, always include more bullet-points than text.
Always Track Progress and Manage Course Corrections
Use lists and tables of numbers to keep your business plan “specific, concrete, and measurable.”
Pay special attention to milestones—a schedule of activities and accomplishments, each accompanied by dates, budgets, performance metrics, as well as anticipated expenditures for spending and sales.
The best planning also requires continuously updated projections, “just detailed enough to offer good plan-vs. -actual analysis.”
Plan for monthly projections at least six months out, but don’t waste time on monthly projections beyond a year. The goal isn’t to see if you can correctly guess what’s going to happen (spoiler alert: You can’t), but to connect the dots (“like expenses to sales”) so you can make adjustments as needed down the road.
Add Descriptions Depending On Your Audience
Depending on the audience, it might be helpful to “dress up your plan” with market details, technical background, executive team bios, and competitive analysis.
As Berry notes, “You might need to prove a market to assure investors or to prove financial stability to assure bankers.”
Update Consistently
Remember, business planning and strategy is an ongoing process, not a final event. Review and revise your plan on a continual basis.
A lean business plan is a “living, evolving, flexible thing.” To get the best results, you must conscientiously attend to its care and feeding.
How do you keep your business plan lean and efficient?
