The Elements of Business Plan - Entroids

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Active Business Planning In A LeanStartup

• By Chandra Gollapudi

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Active Business Planning In A LeanStartupHow to
manage the iterative process of planning,
validating, assumptions, mitigating risks

• eBook Content
• what is active business planning
• business planning vs. plan
• elements of a business plan
• lean startup movement
• agile business planning
• introducing lean canvas
• get most of your lean canvas

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What Is Business Planning?The guiding beacon for
your startup journey!

• Business planning should clarify and refine
• the value proposition
• the strategy
• the business model
• the underlying risks and assumptions

Value Proposition This is the compelling reason
a customer will buy your solution? Analyze the
problem you are solving and assess who has the
most urgent need and how badly they want to solve
it. Use the customer persona template to delve
deep into the psyche of your target customer and
unravel your problem solution fit.
Strategy This is the key part of planning and
can be challenging for a startup. In simple
terms, it is your blue print for the plan of
attack. Strategy is considerably different
according to the stage of your business. A new
startup might focus on brand awareness and
crossing the chasm rather than something like
diversification. Strategy is typically longer
term, coupled with a short term tactical plan. It
is easy to get caught in the day to day chaos of
startup life and lose focus on the long term
strategy.

• Strategy Considerations
• Things to consider include
• What is your addressable market?
• What is your niche?
• How will you address competition?
• What is your core competence?
• Who are your partners or collaborators?
• What is your pricing model?

Unique Value Proposition A single, clear
compelling message that states why you are
different and worth buying Steve Blank
The essence of strategy is choosing what not to
do Michael E Porter
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More On Active Business PlanningBusiness model
is how to create, deliver and capture value
Risks Assumptions A startup is a hypothesis
and, thus has many inherent assumptions and
risks. Identifying and creating an action plan to
mitigate risks and verify assumptions is an
important aspect of Active Business Planning. At
every step in the planning process you should
identify and prioritize the risks and
assumptions. Later in this ebook we will discuss
using Business Model Canvas for this. Execution
should actively test the assumptions and mitigate
the risks. As you learn from this you readjust
your plan and pivot if required. Since Business
Plan is closely related to the planning. It
warrants a discussion on the purpose and roles of
the two.
Business Model Strategy determines WHAT to do.
The business model determines HOW to do it.
Strategy is the plan and business model is the
tactics. Your model details how to generate
profits. There are two sides to a business model
the revenue aspect and the cost aspect.
What Is Your Differentiation? On the cost side
you should consider supply chain, partners,
quality, HR etc. On the revenue side you should
consider branding, marketing, channel partners,
revenue streams, customer service etc. Companies
operating in the same industry and market are
likely to do similar functions. When a company
does one thing uniquely different and better than
its competition, they are using business model as
competitive advantage or it can be a unique value
proposition.
Find synergy between your team and technology
required to deliver the strategy (plan of attack)
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Business Plan vs. Business PlanningPlanning is
more important than plan

• Business planning
• central to Strategy and Tactics
• can be formal and informal
• many new tools to accomplish planning business
  Plan
• uses for one
• many ways to do one

About The Plan Planning is a cyclical process.
However, the plan is like a balance sheet a
snap shot in time. An agile plan, like the
business model canvas is highly recommended. It
helps crystallize your model, value proposition
(why should customers buy from you) and actions
to validate your hypothesis. You may not need to
do a formal written plan unless you plan to raise
external finance.
Steps In Writing The Plan If you are writing a
formal plan. Consider doing the a power point
version first. This helps you visualize the plan
for content and context rather quickly. If you
are writing a formal plan, you should allocate
most of your time on the Executive Summary, and
it should be the last thing you write. Most
readers will not get too far beyond that and your
exhibits.
Why Planning Is Essential? Business Planning is
the link between strategy with the tactics. How
you Plan? People have found creative ways to
plan. Like the famous story about how Southwest
airlines plan was crafted on a bar napkin. One
prominent agile way to plan is the Business model
Canvas.
Its Not enough to do your best you must know
what to do, and then do your best Edward Deming
Everybody has a plan, until they are punched in
the face Mike Tyson
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The Elements of Business PlanGuy Kawasakis
suggested 10 point enchanting business plan

• Ten Elements of A Business Plan
• problem
• your solution
• business model
• underlying magic
• marketing sales
• competition
• team
• projections
• milestones
• summary status

Financial Projections Focus more on your costs,
burn rate and capital requirement. Revenue is
just a wish at this time. Milestones Show what
you have accomplished so far and all the good
things coming your way Summary Status Close
strongly, tune message for the audience
Problem State the problem you are solving. Is it
financially attractive? Your Solution What is
your solution. Show any testimonials or
validation by your customers. Why you? What is
your unfair advantage? Business Model How are
you going to make money?
Underlying Magic Your secret sauce. Why
customers will cry for you and why nobody else
can copy you Competition Show who your major
competitors are and how you will battle them. Use
the Blue Ocean strategy canvas or any thing else
to show differences between you and the
competition. Team Show more than one person
dedicating their lives to make the venture a
success
Business Plan is a tool that may help you get
funded and may help you get your team working as
a team. But it is not an end in itself Guy
Kawasaki
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The Lean Startup MovementChanging how business
planning is done

• Lean What?
• lean startup movement
• lean discovery
• lean influence on business planning

Lean Startup Movement Steve Blanks book 4 Steps
To Epiphany started the lean startup movement.
Eric Ries in his book Lean Startup evangelized
the concept. And the rest is history. There is
now a Lean Startup Conference, several Lean
startup meetups, workshops and tools.
Lean Discovery Process Steve Blank reminded
startups the importance of validating the
solution early. He introduced the four step,
customer development process for testing the
idea through customer discovery, customer
validation, customer creation and company growth.
This involves early and frequent testing of the
hypothesis.
Lean Influence On Business Planning Tech Startups
were spoiled in the dotcom era. They only needed
a idea to get funding. The bubble burst and the
world needed to reset back to fundamentals. Lean
Startup Movement does a great job at this. Eric
Ries the use of minimum viable product (MVP),
which is core to continuous validation and
pivoting. With MVP, you start testing the most
important assumptions and the value proposition
early in the product development cycle
Farming looks mighty easy when your plow is
a pencil and youre 1,000 miles from the corn
field Dwight Esienhower
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Agile Business PlanningMaking the business
planning come to life with tasks and current
actions

• Introducing Agile Business Planning
• business plan vs. business model
• business model canvas
• lean canvas

Business Model How a startup creates, delivers
and captures value Vs. Business Plan Statement of
startup objectives, strategy and the tactics of
achieving them.
Business Model Canvas Created by Alex Osterwalder
is the first visualization of a combination of
the business model and plan. the ability to
succinctly capture the business model on one page
was powerful and widely accepted.
Lean Canvas Ash Maurya adapted the business Model
Canvas to the needs of technology startups. Both
have become extremely popular tools used today.
The lean canvas has a web based interface to make
it easy to use on the go
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Introducing Business Planning CanvasCapturing
the market and product requirements on one page

• Nine Elements Of A Business Planning Canvas
• problem
• customer segments
• unique value proposition
• solution
• channels
• cost structure
• revenue streams
• partners
• unfair advantage

Below is a very brief explanation of the
different segments of a business planning canvas.
This is a mix of both canvases to focus on
planning. Problem How intense is the problem and
how urgent is the need to fix it. Customer
Segments Who is/are the customers and
collaborators (other users). Identify the early
adopters. Unique Value Proposition Why your
solution is different and worth buying.
Solution Features that address each problem
stated. Channels Distribution and paths to reach
customers. Cost Structure Identify costs, capital
requirement, and your burn rate. Know breakeven
point. Revenue Streams Pricing. Start with
validating your premium pricing first. Estimate
customer life time value
Partners Capture key partners, collaborators,
influencers. Unfair Advantage Why is it difficult
for somebody else to copy. Key Omissions I
replaced Key Metrics on Lean Canvas with
Partners. Metrics is important but I wanted to
focus on actionable, and lead indicative factors.
And entroids.com framework has other ways to
cover metrics.
A business model describes the rationale of an
organization creates, delivers and captures
value Alex Osterwalder
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Using The Business Planning CanvasHow to get
most out of your business planning canvas

• Getting Best Of Canvas
• pre- canvas work
• post-canvas work

Post - Work This is very impactful to your team
performance and progress. Planning is wasteful it
you do not drill down to actionable tasks aligned
to your strategic needs. It involves fleshing out
the underlying assumptions and risks.
Understanding their relative importance and
defining actionable tasks and experiments to
validate and test these.
Pre-Work A Good understanding of product and
market is important. Here is a list of essential
tasks and some tools you can use

1. Customer Discovery
2. Competitive Advantage The Strategy Canvas from
   The Book Blue Ocean Strategy
3. Core Competency Knowing what to focus your
   resources on and what to partner or outsource

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http//entroids.com/Blog/?p185
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http//www.theinnovativemanager.com/blue-ocean-str
ategy/
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Putting The Canvas To WorkDrive meaningful
actions that test your business hypothesis

• Business Planning Cycle
• capturing assumptions
• taking actions
• cycle of revelation

• Capturing Assumptions
• Every item on the canvas should be screaming
  validate. Questions to ask while completing
  the canvas to help flesh out the assumptions are
• How so?
• So what?
• Where is the proof?

Taking Action The next step in the process is to
prioritize your risks and assumptions and create
experiments and tasks to mitigate your risks and
test your assumptions. You could use a simple to
do list, or automated software like Entroids.com
Cycle Of Revelation You should instill in your
team the discipline of executing these
experiments and feeding back the learning to make
adjustments to your product and plans. The
success and failure of a team is dependent
largely on the ability of the team to accomplish
this.
Successful teams get into the habit of executing
the business planning cycle. Use automation and
productivity tools to your advantage to get more
done faster better
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Success Planning ExecutionExecution is the
art of getting things done

• Key Concepts For Success
• perfect execution
• strategic execution
• the science of startups

Perfect Execution The best selling book by Larry
Bossidy and Ram Charan has the title Execution
The discipline of getting things done. Perfect
execution is an extension to this definition.
Startup life is chaotic and its easy to get
caught in the whirlwind of daily firefighting and
lose focus on more important things. Keeping
focus of the team and the habit of getting
important things done is the core of Perfect
Execution.
Strategic Execution Key to success is simplifying
strategy to tactical activities that result in
achieving the goals and keeping the team focused
and getting these tasks done. The activities of
the team will be in flux depending on
circumstances. Keeping team tasks nimble and
aligned to strategic needs it the ultimate
challenge. It is the key differentiator for
winning execution.
The Science Of Startups I wish we could say there
is a formula for success. Next best thing is to
use productivity tools that keep your team tasks
aligned to the strategic needs. One simple and
effective tool to use is the A3 Management
Process popularized by Toyota. At Entroids.com,
we understand the need for speed and consistency
in getting results. It is one way to automate
productivity and promote team accountability.
Strategy without tactics is the slowest route to
victory. Tactics without strategy is the noise
before defeat. Sun Tzu
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Thank YouPlease help improve and develop this
E-book to the voice of Startups
About the eBook I hope you enjoyed reading this
mini ebook as much I enjoyed writing it. This is
a small step in the journey of studying the
secrets of success in execution. Please let me
know what you think of this ebook and of the
www.entroids.com . I hope to improve this book
with your comments and experiences.
About Entroids.com _at_entroids is striving to
understand the hidden art of startup execution.
Our first step is to automate startup activities
for faster results and enhanced team performance.
About the Author Engineer turned marketer by day
and avid wine sipper in the evening. I love home
improvement and back yard projects. Wish I learn
to finish more than I start. But that is exactly
what I am focusing on these days. After more than
20 years of experience in marine, automotive,
electrical equipment spanning operations, product
management and marketing it is time to turn my
energy to entrepreneurship. The trenches of
startup world seems home to me. I have diverse
experience in new product development, product
management and Lean manufacturing that I am ready
to put to good use. I am the co-founder of
Entroids a strategic project management
platform that helps startups get better results
faster.
chandrag_at_entroids.com