When you need to create a compelling case for investment funding, a traditional business plan can often be a little too long. In some cases, that long document may complicate an otherwise simple idea.
Sometimes, less may actually be more. To document the core of a business idea or expansion, it can be more effective to develop what’s known as a lean business plan.
Here are some scenarios where a lean business plan may be preferable to the traditional format, followed by practical tips on developing and presenting this strategic business document.
Lean business planning: Trimming the fat
A leaner plan will do your business more good than a long, formal business plan in the following situations:
A lean business plan works for “solopreneurs,” especially those on a bootstrap budget. Since the business plan is primarily for the solopreneur’s use, it can lose the lengthy, in-depth commentary, charts, and graphs.
In this scenario, a lean business plan becomes more of a strategic roadmap and a framework for identifying the value proposition and opportunities, as well as addressing threats.
Documentation for a crowdfunding campaign
The lean business plan is also helpful for entrepreneurs looking to launch from a crowdfunding platform. With a crowdfunding campaign, you typically have limited space to work with.
Instead, you’ve got to convince crowdfunding investors in a few paragraphs with a video and a couple of visuals. A lean business plan can help you focus on the top-level points to include.
Product, service, or market opportunity
Lean planning can also be beneficial for established businesses that want to introduce an additional product or service, or enter a new market. An existing business plan may cover a significant amount of the market research needed to determine if the planned expansion is feasible.
The lean business plan can leverage concrete specifics from the existing plan to build the case for this new opportunity. Reference the existing plan to provide investors or other stakeholders with additional information upon request.
The lean business plan process
Less effort and writing go into business planning for a lean startup. The finished document is typically one to five pages, instead of the usual 20 to 40 pages.
However, the lean business plan may still require a lot of research. All the critical information that goes into a business plan — competitive and market analysis, customer personas and pain points, time line and budget and business model — will still need to be defined and justified. This upfront work can be repurposed later for an investor presentation.
That’s why it’s worth spending the time to interview prospective customers, have them test your product or service, and track what your competition is doing. You’ll also need to explore financial needs and potential results from your business idea, as well as establish a time frame for the launch, break-even point, and achievement of profitability.
The lean business plan look
Your lean plan may look more like a worksheet or infographic than a traditional plan. Within the basic section — strategy, tactics, business model, and time line — you’ll still discuss the competition, differentiating attributes, the problem being solved, and customer personas.
Given the limited space to work with, your writing should be succinct. Aim to hit all the major points in a bullet-list format or through the use of visuals. Remove all explanations and commentary from the lean business plan (but save them in a separate document, as they can be repurposed later).
Don’t be alarmed if you find it more difficult to write in less space. It’s often challenging to write a detailed plan in a way that gets the most points across with the fewest words. The process may take a few revisions.
Lean business = lean mind-set
Having a lean business plan can also help shape a mind-set that embraces doing more with less, which in turn optimizes efficiency by focusing on the most critical business needs. Those critical components include key strategic points around the main problem being solved and why the company’s solution is preferable to the competition’s approach.
Of course, good planning is useless without implementation, so small business owners should focus the meat of the lean plan on execution. That means including information on sales forecasts, cash flow, marketing tactics, launch dates, product or service bundling, and talent management.
With a little deliberation and focus, you can use the lean planning process to help create a similar business culture. The result is a successful business that continues to optimize all of its resources and talent.