As a business owner, you’re – hopefully – aware of just how important planning is. Good business plans keep you focused on what matters most, help you manage your expectations, streamline your operations, and ground you in the realities of your business.
However, it isn’t always a matter of just creating a plan – the kind of plan you choose to make matters too! In this guide, we’re going to be looking at lean business planning. Lean plans are a fantastic compromise between lengthy standard plans and bare-bones one-pagers.
What is Lean Business Planning?
The ethos of lean business planning is simple: small goals, frequent tracking, and responsive action. In practice, that means that lean business plans are fluid (i.e., the goals and strategies change each time performance is tracked). This is a major departure from more formal business plan varieties which can sometimes remain static for years at a time.
Lean plans are written solely for internal use, so they allow you to forgo many of the bells-and-whistles that get tacked onto standard plans for the benefit of external stakeholders. Content is limited to things that make the management process easier – everything else is cut.
Generally, lean business plans should include four main sections or parts:
This section should include a minimalist description of the business’ strategy as a reminder to you, your partners, and your management team. Don’t worry too much about capturing every detail here. Since the plan is for internal use, this is mostly a reminder!
The strategy section should include the following information:
Identity: A simple statement outlining your key value proposition. This helps keep the details of the plan grounded in the identity of the business.
Problem: An overview of the problem that your business is – or is going to – solve.
Solution: An overview of how your business solves the problem stated above.
Market: A minimalist description of your target market demographics. Here, it’s helpful to provide information on the sizes of each segment.
Competition: A list of your main competitors along with what sets your business apart.
You’ll use this section to outline the tactics you’ll employ as you try to align your business with your strategy. Obviously, the specifics of what you need to include here will depend almost entirely on the kind of business you’re running and how you’re running it.
For example, you might want to include a list of your sales channels, an outline of your marketing plan, or a pricing model for your product or service. Other things you could think about including if applicable are lists of suppliers, vendors, partners, or materials.
Performance Tracking Schedule
This performance tracking schedule is arguably the most critical section of the lean business plan. Here, you’ll describe small goals or milestones that are in line with your overall strategy along with the metrics or tools you’ll use to measure performance.
You’ll also provide a schedule detailing when performance will be measured and when the lean plan will be updated. You’ll use the data you collect to inform these updates.
Finally, in the forecast section, you’ll provide estimates for your revenues and expenses. Here, it’s helpful to list all your actual or expected revenue streams and expense classes along with a specific estimate for each.
How does the Lean Business Plan Stay Fluid?
Lean business plans are fluid documents meant to shift with the changing conditions of your business. Ideally, this adaptation follows a cyclical pattern laid out in the schedule section of the plan. There will likely be four stages:
Create a lean business plan by following the steps described in this guide.
Put your plan into action by aligning operations with it.
Following the plan laid out in the performance tracking schedule, track, and report on your business’ performance.
Set new goals, milestones, and targets based on the data collected in the tracking stage. The cycle begins again when you alter your lean business plan to reflect these updates.
Why is Lean Business Planning Important?
For starters, lean business planning is important for many of the same reasons that any business planning is important. The biggest of these is that it helps your business find sustainable success. Research shows that business owners who take the time to develop robust plans are 16% more likely to see their ventures succeed than those who don’t. That’s a major competitive edge.
Lean business plans are important for specific reasons as well, though. One of their main benefits is the fact that they are easily updated when new information becomes available. This makes them ideal for keeping your business responsive.
In addition, lean business plans make fantastic management tools since they’re written for internal consumption. They allow you to cut out some of the wordier descriptions that external stakeholders are looking for so that you’re left with a document that is packed with useful information.
Hopefully, this guide convinced you that a lean business plan is important for your new or existing business. They don’t take long to create, and you’ll see the benefits immediately!