Business Plans, Business Canvases, and Alternative Approaches
Many, if not most, entrepreneurs in developing countries start businesses without a business plan, or any type of plan. If you’re considering entrepreneurship the prospect of a business plan can be confusing, intimidating or beyond your skill set.
What is a business plan anyway? Do you even need one? Why or why not? How do you go about developing one? Let’s tackle those questions together.
What is a business plan?
Let’s begin at the beginning. A business plan is two things:
1. A roadmap that shows where the business is now, where you want it to go in the next few years, and how you will get there
2. An exercise that pulls you through a process to think through all the aspects of your business, anticipate issues, and lay out your strategy and tactics
Do you need a business plan?
You may or may not need a formal business plan. But you do need to think through what you’re going to do and then document it. If you wanted to travel to a specific location you wouldn’t jump on a plane or in a car going in the general direction and hope you get there.
If you’re seeking outside financing you’ll need a full-blown business plan; investors and lenders require it. And it needs to be buttoned-up. Writing a business plan is a difficult process that requires careful introspection and excellent writing skills. There’s no one right way to do it, and many online templates are available to guide you. Pick one and modify it so it’s relevant to your business, and get help if needed.
What are the alternatives?
If you’re not seeking funding your business plan need not be elaborate, but you should write one. It can be just a few pages long, or even a single page. Many entrepreneurs are using one of several “canvases” available online. These are easy, fit on one page, and quick to complete.
The Business Model Canvas was first released in 2008 by Alexander Osterwalder. It is a simple tool to create, analyze, and optimize business models. Consisting of nine fields, think of it as visual representation of your business. This canvas tends to be better for established businesses.
The Lean Canvas is a modification of the Business Model Canvas. Developed in 2010 by Ash Maurya, it also consists of nine fields, but four are replaced with different topics. Lean Canvas is more geared toward startups and for screening/testing business models as brainstorming tool.
Business Canvas vs. Business Plans
So what are the pros and cons of each?
A business plan is a detailed, thorough analysis and summary of the business and how it intends to grow. It’s needed for investors, but is a great tool for internal guidance and clarity.
Advantages of a Business Plan
o More in-depth, detailed, and complete than a canvas
o Very flexible format that is infinitely customizable
o Offers the freedom to elaborate on important items and minimize others
o Very comprehensive and includes all business aspects
o Provides guidance for the business over time
o Is a selling tool and basis for a pitch deck
Disadvantages of a Business Plan
o Takes a lot of time and effort to write
o All sections must tie together cohesively
o Requires excellent writing skills
o Often necessitates assumptions on unknowns
o Must be very well done and stand out to compete for funding
A canvas, on the other hand, is simply a snapshot, sketch, or outline of a business or potential business model. It is more visual than a business plan.
Advantages of a Business Canvas
o Good for screening different business concepts and models
o Completed quickly
o Useful when a full business plan is not needed
o Entrepreneurs can easily think through most important aspects of business
Disadvantages of a Business Canvas
o Not usually a replacement for a business plan; not enough information for investors
o Limited space to write, so cannot elaborate on key points
o Does not include a path to growth
o Misses key factors like competition, risk, financial analysis
What other options are available?
Here at EFour we identified an unfilled gap in the needs of developing-country entrepreneurs. For many of our clients a formal business plan is overkill. Yet a business canvas doesn’t show them what to do after they outline their business model; it lacks an implementation plan.
Our answer is EStarter, and it’s perfect for beginner entrepreneurs. This innovative program includes an online canvas, financial software that focuses strictly on cash flow (the biggest challenge for developing-country microenterprises), and a simple strategic planning tool called EGrowthPlan. It’s everything they need to start a business in a straightforward, no-nonsense format.
for both full business plans (EPlan) and beginners (EStarter).
Full formal online business plan template One-page online business canvas
Full financial software; financial statements and analyses Focuses on monthly cash flow
Growth plan included in EPlan template Simple EGrowthPlan online software
Starts at $30/mo/entrepreneur Starts at $25/mo/entrepreneur
At EFour we feel that careful planning and guided execution are the keys to small business success in developing countries. After all, if you don’t know where you’re going, any road will get you there. Let’s determine the best route for your business.
For more information, visit https://www.efourenterprises.com/. To arrange a free online demo of our ETools contact Donna Rosa at donna (at) efourenterprises.com.