Lean Business Plan

Because the lean business plan is not designed for outside stakeholders, it follows a more fluid structure. I will provide the structure recommended by the Small Business Administration (SBA), but feel free to add/remove sections to reflect the most important aspects of your business.

Key partnerships

Outline other businesses or partners that you intend to collaborate with. This will help you determine what kind of business relationships you need to establish in order to be successful. You might include potential suppliers who provide raw materials, manufacturers who make your products for you, or independent contractors that provide specialized services.

Remember, the point of the lean business plan is not to outline every conceivable detail of your business. Identifying just a few key partnerships will allow you to plan operations and anticipate long-term risk.

Key activities

Define the critical activities that your business must perform to fulfill its mission statement and uphold its competitive advantage.

Example: Suppose you start an e-commerce clothing brand, and your mission statement is, “To create the most affordable and colorful clothing the internet has to offer.” In order to fulfill this mission statement, there are some activities that are more critical than others. For instance, hiring the right designers, developing an efficient e-commerce system, and establishing strong relationships with shipping companies are all activities that significantly contribute to lowering your prices and creating colorful clothing. These activities drive the most value for your company. In contrast, while undoubtedly important, activities like scheduling team lunches, launching PR campaigns, etc. are “secondary activities” that do not directly help your business achieve your mission statement. One missed lunch will not directly impact your mission, but having an unskilled designer will.

Key resources

Here, you should describe the main resources you will use to both fulfill your mission statement and remain profitable. These resources may be physical (tangible) or not physical (intangible). Different businesses require different resources. An accounting firm relies heavily on the expert knowledge of its staff (knowledge is intangible), while a retail store relies immensely on its inventory (tangible). List the main tangible and intangible resources you intend to rely on, and then sure you acquire and take care of these resources. For instance, regularly repair machines that your manufacturing business relies on, or properly train associates in your law firm. Filling out this section will help you understand how where and how much to invest (both in time and money) in various resources to help your business grow quickly.

Value proposition

This section is arguably the most important, and you might even consider putting it first to remind yourself what exactly it is that your business does. Your value proposition is what sets your business apart. What is your business particularly good at? How does your business bring value to the market? You could think of your value proposition as the justification for why your business exists. You are saying, “We deserve a place in this market because we excel in this area and provide unmatched value to our target audience.” Please note what a value proposition is NOT. A value proposition is NOT a statement that your business excels only in one area while neglecting other essential functions. It doesn’t mean you focus exclusively on your core strength at the expense of all else. Instead, it proposes the unique reason customers should choose your business over others.

Customer relationships

Your customers are essential to your business’s health. Having happy customers is invaluable in any business. In this section, detail how you plan to interact with your customers to ensure maximum customer satisfaction. This is different across businesses. When you walk into a bank, you expect (or at least hope for) a professional greeting, personalized service, and time-intensive solutions. On the other hand, when you shop online, you expect a seamless and intuitive website experience, fast response times for questions, and easy merchandise returns. The issue of customer returns is not present in a bank, whereas the time spent on each customer is largely reduced for websites. So, each business is expected to interact with customers differently based on their respective industry, and each should plan how to initiate and maintain positive customer relationships.

Customer segments

This is where you identify your target market- the people most likely to buy your product or service. As I stated earlier, identifying the right customer segment will allow you to focus your resources where they generate the most value for your customers and business. You can add graphs and charts if you think they will help you in the future, but do not feel the need to provide lengthy data analysis. Simply include what demographic and psychographic (buying behavior, lifestyle, values, etc.) traits you are targeting.

Channels

Outline how you plan to communicate with and deliver value to your customers. This could include a combination of online platforms (social media, email marketing, e-commerce sites), offline channels (retail stores, trade shows), or a mix of both. Try to identify the channels that will attract the most customers, give you the most information (without intruding on customer privacy), and make the most sales transactions.

Cost structure

The term “cost structure” here does not refer to managerial cost behavior and structures. It refers to how you plan to deliver value to your customers. There are two main roads to take. One is to try drive down costs as much as possible to offer competitive prices. The other is to increase your product quality and branding to justify more premium price tags. Neither strategy is inherently “better.” Each has its own strengths and weaknesses, so determine which one you are better equipped to pursue.

Revenue streams

The last section explains what exactly your company generates its revenue from. It could be product sales, billable hours of legal advice, or tire repair services. If you have more than one revenue stream, you should identify each separately and explain their respective roles in your business model. For instance, you might have monthly subscription fees for your bookkeeping services, but you also do consulting services during the month, which are billed as they occur. This improves your business model by filling in the gaps between monthly collections of subscription fees.

While I know constructing a business plan, whichever you choose, may seem daunting, it will prove well worth it in the long run. Each section of the business plan has been interpreted and written in countless different ways, so feel free to conduct additional research, modify the business plan structure, and have fun bringing your creative ideas to life!