Business Planning: March 2010 Archives

One of the joys of teaching at Belmont is that I get to keep in touch with so many of our alumni.  I offer my students a life time warranty on their entrepreneurship education, which translates into my willingness to continue to help them out on their entrepreneurial journey after they leave our campus.  We have made a policy in our program to never charge for consulting with alumni businesses and to never take an ownership stake in their firms.

I met for lunch yesterday with my former student Adam Wynia.  Adam was a member of the Belmont golf team.  His final business plan in our program dealt with becoming a professional golfer.  He has been working to implement this plan by playing the developmental professional golf tours since graduation.

Adam also is doing some golf teaching.  He is part of a program that teaches golf in a rather unconventional manner.  It is an approach that takes a rather holistic approach, focusing less on the technical details of the golf swing and more on how the body works together to get a natural, consistent, predictable swing.

The philosophy they take is that the golf swing starts with the ankles, which must work with the legs to help open the hips and get the proper shoulder turn.  The arms and hands are just an extension of the proper movement from the rest of the body.  Too many golfers focus only on their arms and hands.  It takes the whole body working together to get a consistent swing.

Adam said that by focusing on the golf swing this way, the golfer is able to focus on balance.  With the body being balanced, the body can swing naturally and consistently.

I know....this is supposed to be a blog about entrepreneurship, not golf.  But, this has been such a long winter that spring fever has hit me hard and it seems that I can't get my mind off of golf!

As I listened to Adam describe how they teach the golf swing it dawned on me that this is how I am trying to teach entrepreneurship.

The proper golf swing begins with the ankles, which provide the proper foundation needed for balance.  A new venture needs to start with a solid foundation, which comes from proper fundamental assessment of the opportunity -- Is this idea a real business opportunity? 

With a proper foundation, the legs, hips and shoulders can all work together to get the proper swing while staying in balance.  In a new venture, it is the business model that defines how all of the parts need to work together -- in balance, if you will -- to meet the needs of the market.

If you do everything in balance with your ankles, legs, hips and shoulders, your arms and hands will follow.  The result is a consistent, predictable swing.  Think of your business plan as your arms and hands -- it is the natural extension of getting the opportunity assessment and business model right, thus ensuring that all parts of the venture are working together.

Adam said that only focusing on your arms and hands will not lead to a consistent swing. 

Likewise, focusing only on the technical details of the business plan will not lead to a predictable entry into the market. 
I have tried a different approach to business planning with my students this semester.

While I have defended business planning in the past, I also recognize that it is often not used effectively.  People rush into planning without making sure they are writing a detailed document about something that can actually make it in the market.  I also see that people who move into writing a business plan too quickly can get lost in the details.

It is this second issue that has led me to add a new step in business plan development for my students (and with the alumni I work with, as well).

I have integrated a step between the cursory opportunity assessment process and developing a full business plan.

The step is based in large part on the ground breaking work of Osterwalder and Pignuer on business modeling.  It has proven to help them see how the moving parts of the business fit together and work (or don't!) before they dive into the details of planning. 

Here is the assignment (this can serve a s good outline for anyone planning a venture):

1- Mission Statement (25 words)
2- Business Concept (1 page max) - 5%
  • Additional description of the concept beyond 25 words in mission
  • Key values entrepreneur brings to the business
  • Key goals and objectives, including personal financial and non-financial goals
3- The Value Proposition (2 pages max)
  • Based on industry research, why is this an opportunity?
  • What are the macro trends that support this opportunity?
  • What are the more focused localized trends that tie into industry trends above?
  • What is the "pain" in the market does the business address?
  • Cite evidence to support
4- Target Market (1 page max)
  • Who are they?
  • Why are they your target?
  • What are the key attributes that drive their decision to purchase?
  • Who are your main competitors and how well do they address customer preferences above?
5- The communication and distribution channels (1 page max)
  • Where do your customers get their information to make a purchase decision?
  • What form do they prefer this information in?
  • How do they want you to get the product or service to them?
6- The relationships established with clients (1/2 page max)
  • How important is customer service in the business?
  • Do we need to deal with each customer on a personal basis?
  • Do they just want us to get them the product and leave them alone?
7- The key resources needed to make the business model possible (1 page max)
  • People - estimated cost for each
  • Equipment - estimated cost for each
  • Inventory - how much to start and how much on hand (if applicable)
  • Physical space
  • Operating cash on hand
  • Suppliers
8- Key Activities (1 page max)
  • What are the "must do's" to get this ready to launch (Feasibility Plan)?
  • What are the "must do's" to get the first customer (Feasibility Plan)?
  • What are the "must do's" to keep customers coming in the door and to keep them from leaving us?
  • What are the "must do's" to support growth?
9- Key Stakeholders (1 page max)
  • Who are your most critical stakeholders and what will get them to work with you?  (This included sources of outside funding, if needed!)
10- The revenue streams (1 page max)
  • What generates revenues for the business?
  • What will pricing strategies be?
  • What is our pricing structure?
11- The cost structure (1 page max)
  • What is the cost per unit?
  • What is the overhead cost to operate?
12- Breakeven  (One sentence max)
  • When will we breakeven based on these initial estimates?  (More precise figures will come in the business plan)

Blog header by John Price @ johnpricephoto.com

2008 Top 25 Best Undergrad Schools for Entrepreneurs

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This page is a archive of entries in the Business Planning category from March 2010.

Business Planning: January 2010 is the previous archive.

Business Planning: April 2010 is the next archive.

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