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Startup Business Plan vs Business Model Canvas

Test your business assumptions before starting your businessSupporters of the Business Model Canvas (BMC) seem to have a tendency to quickly throw the idea of a business plan under a bus. But I don’t think it’s correct to think of the BMC and a business plan as opponents.

Filling out your business model canvas involves going through the different sections and developing your hypotheses, or best guesses, of what you think your business is capable of. Realistically, this is the same thing you do with a business plan. The preparation and research involved is simply a little different.

In order to fit your best guesses onto the business model canvas, I agree you need to really shorten the business plan. But why can’t a business plan be short anyway?

There is a product from Jim Horan called a One Page Business Plan.

The big advantage of combining the BMC with the customer discovery and The Business Therapistvarious Lean Startup methods is the ability to test and validate your business plan assumptions before you start building the business. This significantly reduces your market and product risks of building something customers don’t want.

But after you nail the problem and test the features of a minimum viable product you can always take your revised business model canvas and turn it back into a short and clear business plan.

As you look to launch your business, you will likely still find mentors, bankers, and other resources providers that will ask you for a business plan. You will want to give them your BMC turned back into a short business plan. (They might even appreciate the brevity so much they actually read it!)

Tell them you have something better than just a business plan full of assumptions and guesses tell them you have a VALIDATED business plan with data that supports your plan!

Very impressive!

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Discussion on the topic

3 Responses to “Startup Business Plan vs Business Model Canvas”

Tax Relief Aliso Viejo

June 17th, 2014 at 2:47 am

You should be honest with yourself in your business plan, which is why it’s important to consider challenges and opportunities. If you’ve got a strong idea, let it stand on its merit.

Chandra Gollapudi

July 15th, 2014 at 3:26 pm

I totally agree with you. There is usually a lot pre-planning required that will go into the Business Model Canvas. And even more important is the post work – this is validating the assumptions and mitigating the risks of the hypothesis. It is the pre planning and post BMC execution that adds value.
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September 19th, 2014 at 12:13 pm

A couple years ago, when I tried to start a business with 2 more friends, I started by writing a business plan as recommended by a local entrepreneurship development organization. We spent about 2 months trying to come up with a plan that included a 3 years forecast.
On paper the idea looked pretty and I was expecting to get rich in less than 3 year as our forecast predicted.
Unfortunately, the practice showed us that our perfect plan was not even close to what happened in reality.
Since then, I`ve been using the BMC to plan and share my ideas with my team.
The Business Model Canvas is definitely a more practical and intelligent way to capture and share business hypothesis than the traditional Business Plan Report.