business planning framework

Ditch the Bulky Business Plan and Get to Market Already

I’m a full-time entrepreneur, but also teach several courses for the SBA, including business planning. My students are probably surprised when I tell them that I prefer that they spend only a small amount of time writing their business plan. Of course they are surprised, especially if another instructor told them all about the virtues of completing a masterpiece of a business plan in order to attract investors and make sure their business had a good chance of success.

Steve Blank, founder of E.piphany and a pioneer in the lean startup movement, obviously agrees with me. He recently stated, “I’d be embarrassed if I was on a faculty teaching ‘How to Write a Business Plan for New Ventures’ … Business plan classes and business plan competitions are dead in the water for new ventures.”

19th-century Prussian general Helmuth von Moltke stated, “No battle plan ever survives first contact with the enemy.” Business plans have something in common with battle plans because no matter how thoroughly they are conceived, reality almost always turns out differently. Franchises are the exception because you are following a well-trod path. In this case, following the long-form business plan is preferable. But most of the time, you are better off creating a short-form plan, testing it in the marketplace and iterating as necessary.

While the intentions behind the long-form business plan are good, in practice, spending a lot of time and energy on the business plan can harm, rather than help, the new venture. I’ve seen new entrepreneurs get bogged down for months (even years) working on deep details of a business plan, instead of what would be far more effective: testing and refining. To put this a different way, I suggest you follow the mantra of “Test, Fail, Test, Succeed, Scale.” To do this, you write a simple overview plan, run small tests to validate your business concept (making your mistakes when the stakes are lower), refine as circumstances dictate, and scale as your tests prove fruitful. At some point (e.g. when you are trying to attract investors) you might want to write the long-form plan, and when you do so, you will find it to be far more accurate and actionable.

In case you are still not convinced, here are four more reasons to adopt the short-form, iterative method of business planning.

  1. It is much faster than writing a traditional plan. When you are starting a new venture, time is your most precious commodity. You should minimize any activity that takes you away from selling to new customers and bringing new products and services to market.
  2. It is more intuitive and easier to complete. Let’s face it: business planning is complex and tedious. Better to do a shorter, punchier version and get to market faster. Your success depends on selling stuff to individuals and companies, not writing business plans.
  3. It is easy for investors and partners to digest. As a sometimes angel investor, I have received a good number of business plans. If the plan makes a “thud” sound when I drop it on my desk, it is probably not going to get a complete read through. But I always have time for a short-form plan, assuming it starts in a compelling fashion.
  4. It is effective. Short-form and iterative business planning gives the business the best chance for success. Your initial marketplace tests, even if unsuccessful, will pave the way towards your future success in a much more effective manner than even the loftiest and most well-written long-form business plan.

Business planning in 2015 is very different from years past. The amount of market and financial data accessible today makes the process infinitely easier. And there are several good single-page business planning formats, including the Business Model Canvas and Lean Canvas, both of which are in widespread use. A more recent addition to the fold is the Business Planning Framework from Center for Business Modeling.

In later posts, I’ll discuss the minimum viable product (MVP) strategy and how it is closely aligned with and supportive of the short-form iterative business planning methodology.

View the Business Planning Framework here.

swot analysis

How to do a SWOT Analysis [Infographic]

When to use SWOT analysis?
Why Use SWOT?
How to do a SWOT Analysis?

Introduction to SWOT

What is a SWOT analysis? It is a simple method of planning that compartmentalizes important internal factors (strengths and weaknesses) and external factors (opportunities and threats) that an organization faces. Simply stated, it is a highly effective planning technique to identify actions that will have a positive impact on business strategy and outcome.

The items revealed in your assessment should be looked at as more than just a list of things you hope to accomplish or may eventually find the time to develop. They are actionable results to drive specific business change. Organizations that ignore or fail to understand, evaluate and leverage their strengths, weaknesses, opportunities and threats will find themselves blindsided by trends in the marketplace and their competitors.

See the SWOT Analysis infographic below.

SWOT

Why Use SWOT?

  • To evaluate a new product or business idea.
  • As a tool to help plan marketing, sales or general business strategy.
  • As a method to improve, re-evaluate, revise or correct an existing offering.
  • To identify a new solution to an existing problem.
  • To uncover potential business challenges.
  • To proactively respond to changes and trends.
  • To better understand how you and your competitors are perceived in the marketplace.

When to Use SWOT?

  • As a way to identify and improve on weaknesses, turning them into strengths.
  • To determine areas where opportunities exist and how best to exploit them.
  • As a tool to help expose and neutralize risks and threats.
  • To better understand your business environment and competitive landscape.

Types of SWOT

SWOT is valuable in gaining perspective on one’s position within an environment. It’s a high level examination often performed early in a project, not as a detailed analysis. It’s best used to understand conceptual or strategic needs instead of tactical execution. Here are some typical types of SWOT analysis:

  • Business Team SWOT – A SWOT analysis performed by an executive team, product team or other business group.
  • Product Launch / Re-launch SWOT – SWOT analysis is commonly used in planning and positioning a product or service offering in the marketplace.
  • Business Launch – SWOT analysis helps Entrepreneurs identify opportunities and position their offering in the marketplace. It’s a key step in building a business plan.
  • 3rd Party (external) SWOT Analysis – An outside inspection can often uncover gaps or deficiencies in strategy. SWOT is an effective tool to gain that external perspective.
  • Marketing or Sales SWOT – From branding to differentiation, SWOT helps define messaging and the unique selling proposition (USP).
  • Personal SWOT – This frequent use of SWOT analysis is to perform a self-assessment of one’s skills and career
    SWOT can be applied to products and services, or departments such as sales, marketing, operations, and financial management.

SWOT as a Business Tool: Strengths and Weaknesses

While SWOT is a highly effective, simple means to gain strategic insight and develop business strategy, it’s important to understand the strengths and weaknesses of this approach. This business tool is most easily described as both simple and flexible. However those two strengths can also be liability.

First, the simple, four quadrant layout of SWOT implies that each quadrant has equal importance. Yet this is rarely true in a given SWOT analysis. For example, when looking at business strategy, opportunities and strengths often far outweigh the importance of weaknesses. Reversing this logic, the opposite may be true when looking at a product relaunch.

Second, it’s not always a straightforward task to transform the results of a SWOT analysis into measurable actions. One challenge is narrowing the list of items in each quadrant to a reasonable number of items where the resulting actions can realistically be addressed.

Getting Started with SWOT

How does one do a SWOT analysis? For each of the four quadrants, identify and rank the points that best describe your situation. It’s often best to prioritize and limit the number of items in each quadrant to keep the SWOT analysis manageable.

Strengths – These represent internal factors (tangible or intangible) that are within your control which impact your organization. Following are examples of questions you could ask to determine your strengths.

  • What are one’s internal strengths or areas of excellence?
  • What areas are most profitable to your business?
  • What types of resources are available to you? (i.e., people, technology, reputation, skills, education, etc.)
  • Where does one have a unique advantage or significant head start?
  • What things are exclusive to your organization that add value or give you a competitive edge?

Weaknesses – Are also within your control, but these factors prevent you from successfully maintaining a competitive edge. Look for things you can do that will aid in achieving your business objective. Following are examples of questions that will help determine your weaknesses.

  • What areas leave you most vulnerable?
  • Which areas of your business cost you the most time and money?
  • What things within your control can you improve on?
  • What factors create a competitive disadvantage for you?

Opportunities – Are factors external to your business that when identified will help you understand the market and environment and position you to profit from areas exposed. Following are sample questions to help you determine areas of opportunity.

  • Where can we take advantage of market trends?
  • Are we using our resources effectively? (i.e., technology, people, skills, etc.)
  • Where can we exploit our strengths and the competition’s weaknesses?
  • Do any products or services offer new opportunity for growth?
  • How are we perceived in the marketplace?
  • How is our competition perceived in the marketplace?

Threats – These are factors outside of your control that represent risks to your business and strategy.

  • Which competitors are coming on strong?
  • How will economic issues impact our ability to thrive and expand?
  • Where are market trends working against us?
  • What are the greatest risks presented by competitors, marketplace trends including consumer behavior?

The Right B2B Marketing Strategy for Your Business

There’s no question that the right marketing strategy for your business will depend on your brand, your business capabilities, your solutions, and most importantly, your market. But knowing the distinct trends can and should influence your marketing priorities.

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Additional SWOT Resources