Have you ever written a business plan? Did you enjoy the process? Or maybe you’re one of the lucky few who have never had to write one.
Most people hate writing business plans.
They take too long to write. You end up making up most of the answers. And worst of all, the people who make you write these plans (i.e. investors), don’t even take the time to read them — opting instead for shorter versions like the 1-page executive summary, 10-page slide deck, or 30-second elevator pitch.
But a no-plan alternative isn’t the solution either.
It would be akin to building a house without a blueprint. While carrying your core business model assumptions in your head alone might seem like the fastest alternative, you need to beware of the reality distortion fields that plague entrepreneurs.
Reasonably smart people can rationalize anything, but entrepreneurs are especially gifted at this.
Most entrepreneurs start with a strong initial vision and a Plan A for realizing that vision. Unfortunately, most Plan A’s don’t work.
Instead of chasing a mythical perfect plan, what you need is a well documented starting point and a systematic process for going from your Plan A to a plan that works before running out of resources.
This is where the 1-page business model comes in.
The 1-Page Business Model Canvas
While writing a business plan can be a good exercise for the entrepreneur, it takes too long and more importantly, falls short of its true purpose: Facilitating conversations with people other than yourself.
The problem with business plans isn’t the planning but the format.
Additionally, since most Plan As are likely to be proven wrong anyway, you need something less static and rigid than a business plan.
Compared to business plans, creating a 1-page business model is:
Instead of taking weeks or months, you can outline multiple business models in an afternoon.
Because your business model has to fit on a single page, you have to pick your words carefully and get to the point. This is great practice for distilling the essence of your business.
A single-page business model is much easier to share with others, which means it will be read by more people and be more frequently updated.
Here is what a 1-page business model looks like:
The image above shows the Lean Canvas format which is my adaptation of Alex Osterwalder’s Business Model Canvas.
If you’ve ever written a business plan before, you should immediately recognize most of these boxes.
I liken these boxes to lego building blocks. You can use the same basic building blocks to build both simple and complex models.
Like lego blocks, the canvas also invites an element of play and creativity which is healthy for achieving breakthrough innovation.
But most importantly, the lightweight nature of the canvas is ideally suited for the innovator’s journey which is best characterized more as a search than execution of a working business model. This requires a multi-faceted plan of attack (to avoid ending up on a local maxima) and an agile mindsight that can quickly adapt and evolve with on-the-ground learning.
How many people keep their business models updated? Doing so with a Lean Canvas is not only quick but an effective way for telling your business model progress story to a room full of external stakeholders (aka advisors and investors).
Intrigued? Take the 20-minute business model challenge at http://leancanvas.com
Already convinced? Cast your vote as a comment:
Who will win - Business model or Business Plan?
About the Author: Ash Maurya is the author of the best-selling book Running Lean and creator of the 1-page business model format Lean Canvas. Grab his free video on the #1 reason why new products fail.