Tag Archives: framework

Framework to create a business plan

 I have been lately seeing lot of folks asking how do I create business plan. Since each business is different  because of product, revenue model, distribution, target segment etc , its not possible to suggest something specific unless I know all the facts of that business.
But below is the framework which should be good enough for anyone to learn and comeup with their business plan. This framework also helps founders to really understand all the different pieces of the business and how each of them can affect their business .
1. Download template of lean canvas and fill in all the details, validate with all stake holder and iterate it till it makes sense

2. Next download Business model canvas and the value proposition companion/template/plugin along with it. Again do the due diligence,
validate and iterate it. Lean model canvas and Business model canvas overlap to certain degree, but give very different perspective.
Lean model gives you or helps you identify what is the problem, what is your unique value proposition and have you validated it or verified all the riskiest hypothesis. Typically you do this even before you have your MVP or when you are idea stage.
Once you are clear, fill the business model canvas and then start attaching dollars to it. Those guys have a website called strategyzer.com which lets you do cost estimations and generate P&L statements. Start playing with it by changing one variable at a time. For example, change the size of customer segment or change the distribution channel etc and see how your bottom line is getting effected. Add all the costs to account for every dollar . Dont forget to include customer acq costs etc in the eqn . Include costs for book keeping, legal , office expenses as well. Check the P&L statement see if it makes sense
Once you have it, just translate that canvas into words for business plan word doc, into ppt for your pitch deck and you can use the P&L statement as is or translate into EBITDA structure if you love using that word…
One thing which will be missing from the above and which is required are the following :
( This you should already have it from your customer development phase )
1. Depending on your company whether its B2B or B2C or B2B2C and product, show some metrics how much traction you got already and/or planning to get and what will it cost
2. Tell me whats the avg life time value or length of relationship
3. Tell me how much does it cost to retain them once they become your customer. If you dont have one, what are your anticipated costs
4. What does your sales funnel looks like and how long does it take to make one successful sale
5. Any other metric which shows investors or to your audience that you have what the market wants and is ready to pay
6. If you are web based or app etc, also tell me what your growth hacks are
7. Depending on whether you are 1st time entrepreneur or serial entrepreneur , introduce yourself and your team at the appropriate time. Most 1st time folks do it in beginning .
If something is not clear or if you have followed a different approach/framework, would love to hear more about  it. 
Advertisements

Startups: Applying lean methodology and business model canvas frameworks

Startup-Image

I’ve been recently asked by many and also I’m seeing similar qns on Quora and coursera entrepreneurship courses.If you are wondering what the question is . Its very simple. It goes along these lines…I have couple of ideas and/or I have shortlisted few of them. Now what do I do?

I was in the same boat multiple times and having been part of multiple startups as early employee and also as someone who failed once before while trying to start a consumer electronics before, I started following this lean methodology framework for my current digital healthcare startup (www.sensoryhealthsystems.com)

1. Download lean canvas ( http://www.leanlaunchlab.com) to understand UVP of your solution. Have only 1-2 strong UVP that is directly addressing the pain points and must-haves
2. Break down your idea into multiple questions and for each qn
a. Talk to atleast 25 people.
b. Get feedback
c. Validate the hypothesis

3. Next download the business model canvas and fill in the whole canvas
a. Next change the customer segment and see how it impacts the cost/revenue stream
b. Keep doing this for all customer segments. You can make some approximations in terms of how much you might want to charge.
c. Repeat the above expt with Distribution channels. For example, if you are making an app that is downloadable via app store or google playstore, then you have give away 35% of what you make..web version you dont give any..so figure out how the distribution channel affects your revenue
d. Figure out who you want to partner with and what the partnership costs are

4. Next depending on whats your customer demographics , figure out the below by running mkting/ad campaigns
a. User acquisition costs (CAC)
b. Figure out the life time value (LTV)
c. Make sure LTV > 3 x CAC at the min
d. Figure out what the funneling looks like and how long does it take to convert a single user to paying customer
e. Figure out how you plan to retain customer and how much does it cost over the life time value of the customer..

5. Build up MVP and iterate it by constantly getting feedback from your prospects…try to sell them and see if they would be interested…if they are not interested, dig deeper why they dont want to ..is it not addressing the pain point directly, they dont see much value for the price you are offering , usability of product sucks or steep learning curve, trust etc….

6. Get some informal medical advisory team who is expert and understands the value proposition of your offering. Get 2-3 mentors as well who can guide on business side …

7. Once all the above are done, then form your core team, get a cofounder or principal, CTO and get the beta out….

Feel free to ping me if you have any qns. Good Luck…