The dramatic increase of small businesses in the United States during the last five years prompted the business community to rekindle the concept of Lean Business Plans. While having all these start-ups is laudable, 45% of them fail after five years.
The key to having a successful business, small or large, is having the right idea at the right time and crafting a viable business plan to fill that market niche. However, many entrepreneurs don't write business plans because they recoil at writing a voluminous traditional or formal business plan that spans 30 pages and has multi-year income statements and layers of operational complexity.
A lean business plan is the perfect solution for that problem.
Traditional Business Plan vs. Lean Business Plan
Traditional business plans tend to be written for start-ups that have multi-million-dollar revenue objectives and require large amounts of seed funding for a large staff and large office spaces that keep the enterprise running until it turns a profit. Investors want to know how their money will get spent, the potential market share, and the founders' experience. Hence, the 30-page masterwork loaded with numbers, graphs, and charts takes three months to create.
A lean business plan, however, is more effective for a small- to medium-sized business (SMB) because it concentrates on the key elements of the company. You’ll give a traditional plan a big haircut by writing a lean plan that outlines your business idea, what market problem you’re solving, how you’ll solve it, how much money you need, and when you’ll break even.
Why Lean Business Plan Methodology Is Gaining in Popularity
The Small Business Association (SBA) encourages entrepreneurs to develop a lean business plan first, even when contemplating writing a traditional plan later. This approach helps lean startups organize their concepts without getting bogged down with unwieldy traditional plans that often discourage writing a plan in the first place.
Start-ups commonly fail for six reasons. However, entrepreneurs today have access to a greater variety of resources than ever. Web-based apps, digital libraries, government agencies like the SBA, and mobile solutions provide a robust ecosystem for new companies.
These invaluable support systems often mitigate the need to write traditional plans for SMB start-ups because vast data stores are but a click away that can help entrepreneurs and potential investors validate any business model.
Benefits of a Lean Business Plan
Lean Business Plans continue to grow in popularity for these important reasons:
- Accessibility: Lean plans are relatively easy to conceive, formulate, and understand. Anyone with basic business sense can discern the unique value proposition (UVP) and unique selling proposition (USP) without being a former CEO.
- Speed: A lean business plan only takes two to four days to write and requires only three to five pages to complete. Compared to a traditional plan, this lean approach moves at light speed.
- Flexibility: A lean plan allows you to organize the business concept and summarize the UVP and USP in short, easy-to-digest thoughts, which can be modified when new information or investor inputs are presented. And it can be upgraded to a traditional plan later if needed.
The Major Components of a Lean Business Plan
Since you’re writing a lean business plan, you’ll be pleased to learn that such plans still have all the key elements of a traditional plan (again, making it a great foundation to build on later as you grow your business).
- Business Model: There’s no way around this essential requirement. Everyone, especially you, must understand the business model you’re starting to make a profit (e.g., retail, manufacturing, fee-for-service, etc.).
- Strategy: This describes how your company will solve a problem or addresses a market need and how it differs from competitors (aka the differentiator).
- Tactics: Outlines the operational steps needed to manage marketing, sales, and business objectives.
- Schedule: Explains when your business starts operations, where it’s located, when it expects to break even, and when it’s profitable.
- Income/Expense Statement: Summarizes revenues, sales, and expense projections for one year.
What to Include in a Lean Business Plan
The value of “lean” means describing these elements in a few short and clear sentences; write only one paragraph per subject.
- Overview: Describes your company’s mission
- Problem: Shows what problem you’ll solve or market need
- Solution: Outlines how you solve the problem
- Target Market: Defines your customers and the market
- Competition: Identifies competitors and what differentiates your company
- Marketing: Explains how you’ll reach customers
- Sales Channels/POS: Outlines where you’ll meet customer needs
- Revenue: Shows how you’ll make money
- Expenses: Summarizes start-up costs and ongoing expenses
- Milestones/Growth: Projects timelines for attaining business goals
- Partners/Resources: Indicates your business connections and other professional assets
- Talent/Roles: Identifies the team, relevant experience, and type of expertise you still need
How to Write a Lean Business Plan
Since you now understand the requisite elements of a good lean business plan, these links provide excellent resources and apps to help you write a lean business plan document.
- Hoshin Planning Process: Outlines a step-by-step thought process needed to develop a lean business plan.
- SBA Guide to Lean Business Plans: Shows how to write a lean business plan.
- What It Costs to Start a Business in 2022: The Bubble community offers excellent tips on what it costs to start a business.
- Emerald Insight: Provides insights on what kind of business plan to use.
- Startly: A one-stop service that provides enhanced time and expense solutions.
Important Next Steps
- Add an MVP Summary. A start-up that plans to sell a new version of an existing product should consider adding a Minimum Viable Product (MVP) summary. The MVP protocol is an important testing and engineering process that ensures a prototype gets the proper development and testing prior to release.
The MVP methodology plays well with the lean business philosophy because it enhances the development of existing products rather than starting from square one.
- Get Funding. Once you have a solid lean business plan, you'll be in an excellent position to look for funding. The Bubble community can show you how to get seed funding.
- Getting Started. There is no time like the present to start building your dream. This is your Call to Action (CTA): wake up, get up, and start-up. Today.
How a No-Code Solution Like Bubble Can Help
Bubble’s numerous no-code platform solutions are invaluable tools that help entrepreneurs start new businesses. In addition to saving considerable time and money during the development phase, the Bubble community offers a wealth of know-how and support tools that guide entrepreneurs during the daunting start-up process.
These support structures complement the lean business plan approach because Bubble eliminates many infrastructure costs and operational hurdles a new company must overcome.
Bubble is a leader in the no-code movement. Bubble offers a powerful point-and-click web editor and cloud hosting platform that allows users to build fully customizable web applications and workflows, ranging from simple prototypes to complex marketplaces, SaaS products, and more.
Millions of users are building and launching businesses on Bubble — many have gone on to participate in top accelerator programs, such as Y Combinator, and even raised $365M in venture funding. Bubble is more than just a product. We are a strong community of builders and entrepreneurs who are united by the belief that everyone should be able to create technology.