The business plan has undergone an evolution since many years ago. Even today it still continues to evolve in ways that are worthy of mention. In this article we shall take you through the evolution of the business plan.
The evolution of business plans cannot easily be annotated like is usually the case for other things. There are actually no detailed sources that cover how the business plan has evolved over time.
With that in mind, we still went on to study how the business plan has evolved over time. We found out that their evolution is more do with alternatives to the business plan that have emerged over time. That will give you the picture as to how they have evolved.
Are Business Plans Becoming Obsolete?
This is a pertinent question because some people think that the business plan has run its course. The truth is there are so many circles in which the business plan is no longer even used.
To say that the business plan is obsolete might be, in fact, is too exaggerated. It is still being used in many circles – we are referring to the traditional business plan. By traditional business plan we are referring to that document averaging 30 to 50 pages in size. The business plan with the following sections : Executive Summary, Company Or Business Description, Industry Analysis, Customer Analysis, Competitive Analysis, Marketing Plan, Operations Plan, Management Team, Financial Plan, and Appendix.
So what has really happened to the business plan over time? We shall be looking at that as we move along.
The Business Plan Has Morphed Into Other Alternatives
There are now several alternatives that have now comfortably taken the place of the business plan. Most of these alternatives actually have semblances of a business plan. This is so because most of them are somewhat based on, inspired by or are variations of a business plan.
Let us explore some of them here:
Minimum Viable Product – MVP
It is now very common to find MVPs being used to actually present a business plan. This would typically go along with a structured presentation of sorts – even a simple Microsoft PowerPoint one.
The approach here will be to demonstrate how your product works in order to convince prospective investors or financiers. This is obviously applicable to business ideas whose model allow for one to come up with a MVP or prototype that can be used during pitching.
Business Model Canvas
When you look at this you will notice that it is somehow similar to components in a business plan. However, it is much leaner (in fact, it also called a Lean Canvas) than the traditional business plan. The fact that it can be presented on just one page makes it faster to pitch to potential investors.
The 9 components of a business model canvas are Key Partners, Key Activities, Key Resources, Value Propositions, Customer Relationships, Customer Segments, Distribution Channels, Cost Structure and Revenue Streams. As you can see those are actually things you would normally find in a traditional business plan. The business model canvas is essentially akin to summarizing an otherwise lengthy business plan document.
Pitch Deck
Where a business plan document and possibly with a presentation used to cut it is now covered by a pitch deck. This is a precise and concise series of anything between 10 and 20 slides that details pertinent details about a business idea.
Some of the key components to be included are problem statement, proposed solution, business model, competition analysis, management team, market analysis, marketing dynamics, and financials. This can be done using presentation software or can simply be done manually.
Business Brief
We then have what is called a business brief. Typically a business brief contains overview of the business’ background, goals and objectives, unique value proposition (essentially what and how the business seeks to address a particular challenge), products, target market, competitors, and marketing strategies.
The key word there is “brief” – that is why on average a business brief document must not exceed 3 pages. Again looking at the sections to be included you can see that it somehow evolved from the traditional business plan.
Key Things To Note In The Evolution Of The Business Plan
A Shift To Less
Earlier we mentioned the typical length of a traditional business plan – about 30 to 50 pages. That is quite a lengthy document to go through especially for busy people. Ironically, most of the prospective investors and financiers for which business plans are usually intended are extremely busy people. This is why it comes as no surprise that over time business plans have evolved into smaller or shorter alternatives.
We discussed some of the alternatives up there. Consider the MVP for instance; it might not even need any written document at all. The business model canvas is just one page long, the pitch deck is anything between 10 and 20 minimalistic slides, and the business brief is on average 3 pages long.
So apparently shifting to lesser (and only majorly important) aspects has been a key characteristic in the evolution of business plans.
Format Change
This is also another element in the evolution of business plans. It is of course married to the discussion we have just concluded in the previous paragraph. Instead of the sections with descriptive or explanatory paragraphs there has been a shift to bulleting.
Most of the alternatives we explored earlier are characterised by bulleting a lot. This feeds into the minimalistic aspect and also feeds into the “straight to the point” aspect.
The overall shift has been moving to covering only what matters in a bid to reduce the amount of detail that has to be gone through in assessing entrepreneurs’ funding requests. This has actually been and will continue to be good news to both the entrepreneurs and the prospective investors or financiers.
Less time gets to be used in both preparing the means and also in presenting it. It also helps the entrepreneurs to focus more on the core components of their businesses.