A lean business plan is not as thorough as a traditional business plan. However, it is a good document to quickly write up if your business is simple to understand or if you’re just starting out and foresee possible changes to facets of your business. Think of a lean business plan as a stepping stone you can prepare to eventually complete your full traditional business plan. Or, conversely, if you already have a traditional business plan drafted up, a lean business plan might be something you write up to pass along more casually to potential silent partners or investors who just want a quick glance of your business.
Now, just because a lean business plan is shorter in length, that doesn’t mean it should be “less than” in any other ways, so to speak. It should still be thorough, accurate, and presentable i.e. good grammar and formatting. Because, remember, your business plan is someone’s first impression of your business…do you want them to remember a well-put-together report or a lazily thrown together document?
The choice is in your hands…but if you don’t want to be a part of the latter group, then we suggest you look over what should be included in a lean business plan below:
a) Key Partnerships
Start with this section, which briefly outlines any other business you will rely on to run your company i.e. subcontractors and manufacturers. In even simpler terms, sit down and ask yourself, “What other businesses help my business work?” Or, “What business-business relationships are crucial in the success of my company?”
The most obvious answer to this question may be about the supply chain i.e. if you are running a restaurant, your food and ingredient supplier is crucial to your success. However, your key partner section shouldn’t stop there.
A key partner may go beyond what they supply you in a physical sense, and move into key services or activities they provide you with…but more on that in the next section.
b) Key Activities
Briefly outline the things that make your business stand out from competitors to gain consumer attention and loyalty. Or, more simply put, what do you do that your competitors don’t? What actions do you take as a business that set you apart and will therefore draw in customers?
Another way to interpret this section is: “What activities does your business engage in to increase profit?” You might think of answers like market research, streamlining operations, and thorough hiring procedures. All of these would be done in a way that is unique to your business with the end goal of making profit, therefore they are apropos to add into this section of your lean business plan.
c) Key Resources
In this section, you’ll want to sit down and ask yourself: What resources do you have that make your product or service more valuable to the consumer? Is it a diverse staff? One of a kind intellectual property? Basically, what about your business offers the biggest advantage as compared to your competitors?
Keep in mind as well, that “resources” is a big word that encompasses a lot of things. Again, your mind might first consider the “physical” resources your business needs to thrive, like an office space, computers, and raw materials, however, that would only be one part of the larger story.
In this section of your lean business plan, you’ll also want to talk about your human resources, intellectual resources, and financial resources.
Who is on your team and why are they so beneficial to your business model? What patents do you have that can ensure your business and business model is completely unique? What sources of money are readily available to you, i.e. cash, credits, loans, etc.?
Some people like to think of this section of their lean business plan as their business’ “secret recipe,” or all the working parts that allow their business to be the success story that it is/that they long for it to be. Really take that into consideration as you craft this section, constantly reminding yourself: “If these resources don’t seem impressive or useful to me, they certainly won’t be to future partners or customers.”
d) Value Proposition
Why is your company valuable to the market at this moment in time? In one single word, this section should be compelling.
Your business’s Value Proposition, or UVP (Unique Value Proposition) should really make three things clear: A) How does your product or service solve the consumer’s problem? B) Why is your product or service valuable? C) Why does your product or service do it better (quicker, cheaper, easier, higher-quality, etc.) than the rest?
If you felt as though the other sections were a place to be verbose and thorough, then think of your UVP as the opposite: concise and convincing. It’s like an elevator pitch, or brief explanation that gets straight to the point about why your business is the best.
Your UVP is not the place for fancy language or run-on sentences. It’s your chance to get to the point of your business and pique the reader’s interest to know more.
e) Customer Relationships
How will you build relationships with your customers i.e. in-person or online? And why will it be successful?
You can also think of this section as answering the following important questions: How will you get customers? How will you those keep customers? How will you upsell those customers/Continually grow your relationships with those customers? Or, in the words of Steve Blank, “Get. Keep. Grow.”
Typically the model behind this section of a lean business plan looks something like this: Use marketing, advertising, and promotion to acquire customers; use blogs, events, loyalty programs, subscription model, or outreach programs to keep customers; up-sell and cross-sell to inspire higher sales and referrals that will restart the customer acquisition cycle.
f) Customer Segments
Who does your business serve? Remember to include demographic information here, when possible, as demographic often informs the needs of your customers and the problem they might look to your business to solve.
When drafting this section of your lean business plan, it might help you to understand your customer segment as being directly linked to your VSP, (point d, above). Why? Because it is this customer segment that you define here that you have to convince of your VSP, and if the two don’t match up, your business may struggle to close sales and break even.
More specifically, your business’ customer segment may fall into anyone of the following five groups, and it’s important to identify which one:
- Mass Market – meaning there is a wide variety of people who would be interested in this product or service, such as a refrigerator since it serves an extremely common need
- Niche Market – or a highly specific or specialized market with very particular needs, such as vegan women’s shoes
- Segmented Market – meaning your business markets to or acquire customers differently based on their needs, experiences, and preferences, like having customers all over the country, but knowing to use one marketing campaign in New York versus another in Wyoming
- Diversified Market – or serving multiple different customers with very different needs, like Amazon providing retail to the general public and cloud services for fellow businesses
- Multi-sided Platforms/Markets – where one end of your business model is dependent on the other i.e. eBay relies on both sellers and buyers to remain a successful business model.
How do you plan on communicating with customers in order to successfully reach your VSP? If you didn’t already know, there are five phases of customer channels, they are:
- Awareness i.e. advertising
- Evaluation i.e. surveys and reviews
- Purchases i.e. how are transactions made
- After Sales i.e. customer support, return policies, and follow-up.
Take time in this section of your lean business plan to explore each one as thoroughly, yet as concisely, as possible.
h) Cost Structure
Explain how your company plans to make a profit. Is it by cutting your own costs to offer the cheapest product or service possible? Or is it by raising the price in order to deliver high-quality, never before seen results to your consumers? Also discuss what costs will be incurred working towards achieving these financial goals.
Keep in mind as well that a business incurs different kinds of costs: fixed and variable. Therefore, be sure to include what costs in your business model are fixed? Which are variable? How much do you intend to pay for each one? And how can you justify these costs and guarantee that even with these costs, your business will still be profitable?
i) Revenue Streams
Finally, how exactly does your company plan on making money? By the sale of a product? Through membership fees? By selling ad space? List every revenue stream your company has- it’s ok if there’s more than one!
We hope that was a helpful lean business plan guide! Even though you may still feel as though you have a lot of work ahead of you when it comes to launching your business, fear not! A well written business plan is where many of your business’ kinks may finally get worked out and solved! Especially if you put in the appropriate amount of research and reach out to colleagues for advice and tips while you’re working on your draft.
But, before you get started putting pen to paper for your plan, be sure to drop your email in our newsletter sign up below! It’s the only way you’ll get Business Plan King tips and tricks directly to your inbox, no charge and stress free!