Business planning is (and remains) certainly one of the most important task for an entrepreneur
But the rate at which business changes today is much faster than it used to be, as the available time left to adapt to such a drastic change.
Therefore is hardly possible to create a reliable/classical 3 year scenario-it often ends with depicting a depressing and unrealistic “hockey stick” diagram shaped revenues growth, where the stick is very often pointed in the wrong direction.
But that doesn’t mean at all that business planning isn’t worthy of investment, because the beauty is in its execution: if everything and everybody is changing there is something that changes very slowly and that’s probably what investor in the end appreciate the most: you. Investors don’t want to take risks without a good chance of profit and you represent the personification of this warranty.
Business planning can be considered as the life-code, the DNA enabling the creation of a sophisticated risk-reward model that requests the interaction between at least 3 stakeholders (investors, customers and you), a blueprint to build a social structure based on value creation and trust
Let’s take a typical representation of what should compulsory be inside a “modern” dynamic BP:
- THE STORY
- THE ISSUE AND YOUR SOLUTION
- MARKET ANALYSIS
- GO TO MARKET: WHY NOW, WHY BETTER THAN COMPETITORS
- MANAGEMENT TEAM
- FINANCIAL PLAN
Ok. Now let’s analysing it according to the following categories:
What are you exactly communicating to your potential investor from this perspective?
- THE STORY: how I (as an entrepreneur) do manage risk right now and how successfully I did it before
- THE ISSUE/SOLUTION: how can I specifically mitigate risk and why is this way of getting reward unique/different than others
- MARKET ANALYSIS: how efficiently such a risk is handled right now; How big our reward can be
- GO TO MARKET: how fast I can handle risk; when can I expect my first reward
- MANAGEMENT TEAM: I’m going to tell you why we assume we can be an efficient risk manager; how I’m going to manage rewards
- FINANCIAL PLAN: How big is the risk we run; how long; which one is the minimun viable risk I’ m asking you to run in order to get our reward
As you can see therefore a BP can be interpreted as a risk-reward business modelling process that aims to fully align the interests of the entrepreneur and the investor while enabling a consistent and sustainable growth. And that’s definitely a win-win situation.
And then? What’s behind risk-reward? You again.
Then you are like mother yeast.
Each sourdough has its own characteristic that makes it typical and unique: different from any “baking powder” because it is “alive”. You BP can be dynamic but never alive: you can.
Today’s bread is made of today’s yeast, but today’s yeast is a piece of yesterday’s and it carries with it the ancient characteristics: that is the reason why the products are so unique. Who’s is bringing into business experience? You. And who’s is owning know how? Again you. Exactly as mother yeast and against all the rest (which is by definition ever changing, i.e. market conditions, economics, competitive advantages, tec etc) your value increases with time.
Yeasts demand regular daily feedings of flour and water in order to produce the organic acids, alcohols, and carbon dioxide necessary to make bread rise: so invest also in your own development and not just in your business.
Yeasts improve the bread’s texture, nutritional value, and shelf life: a good entrepreneur improves business in many different ways, and only some of them is sometimes visible inside a BP.