Business Model Plan Final: Fill & Download for Free

I was lucky enough to create my first business right out of college. After winning $50,000 in an entrepreneurial competition, I did a ton of research on business opportunities to see whether I wanted to buy an existing business or launch my own. What I found over and over again is that the majority of entrepreneurs out there were struggling with access to capital. So my co-founder and I decided to launch a local company called FundingUniverse. We matched small business owners around the U.S. with angel investors and venture capitalists to help meet their funding needs. Within a few years, FundingUniverse grew to generate $10 million in annual revenue. But we quickly realized that the business model wasn’t scalable beyond that point. We had discovered that most small business owners were looking for small-dollar loans, not venture capital (only about 1 to 2 percent of businesses were a good fit for that). So, we had a choice to make: continue down this path, knowing it was a dead-end, or start over.Fortunately, I had a good mentor at the time who forced me to think outside the box and come up with a plan to reinvent the business model. In January 2011, we shut down FundingUniverse —going from $10 million in revenue to zero overnight, and launched Lendio, a small business loan marketplace that matches businesses of all sizes with the loan that’s right for them.Scrapping what we’d built and launching a completely new company was scary, but the business has far surpassed what we ever dreamed of. And while starting a company is not easy, if you have an idea you’re passionate about, you are hard-working, and you are resilient enough to withstand all the highs and lows of entrepreneurship, you just might have what it takes to turn your business idea into something real.

The Business Model Canvas is a very useful tool for discovering and exploring your business model. It's great for brainstorming and quickly iterating through your concept.If you are going to use a canvas, though, I prefer Ash Maurya's "Lean Canvas" version. I think it does a better job helping entrepreneurs focus on the problem/solution fit as well as product/market fit. Unless you are creating a revolutionary business model, I find the Business Model Canvas doesn't do a great job of explaining a business to others and doesn't help you focus on making sure you are solving a problem that actually exists.Once you have identified and validated your business model, then it's time to move into proper business planning. You are now in execution phase and need a plan that your team can follow to execute your proven and repeatable business model.What type of plan you need really depends on who your audience is. If it's an internal plan, keep it simple and don't bother with things like company history, incorporation status, etc. If it's an external plan, those types of things may be more important.Finally, depending on your type of business, you may need to move into planning phase earlier in the process. If you have a capital-intensive business or a business where cash flow is a critical issue and your customers take a long time to pay you, creating traditional business plan forecasts earlier in the process might be necessary. Without these models and cash flow forecasts, it will be very difficult to determine what kind of financing you actually need.And, full disclosure, my company makes a business planning software product called LivePlan (http://www.liveplan.com), so I am a bit biased towards using a business planning process and tool to help you think through all the issues you will face as you start your business.

Pivoting is a strategy for iteratively searching for a repeatable and scalable business model.Creating a successful company is essentially a search for the repeatable and scalable business model. To succeed in this search, startups should frequently make and test predictions about what will work in their business models. If an element works, then future iterations should retain that practice, but if it does not work, the startup should “pivot” by changing one or more elements.This “pivoting” practice contradicts the traditional model of creating – and sticking to – a conventional multi-year business plan. Serial-entrepreneur and academician Steve Blank notes that adhering to such a business plan is rarely feasible given the unpredictability of future market conditions. Additionally, successful startups tend to be companies that shift from business model to business model until they find the right fit. Unlike larger companies, early-stage startups need not be as concerned with plan execution, since the “leaner” nature of a startup allows for more seamless transitions between different business practices.While you might want to pivot, you don’t want to jump. Pivoting differs from jumping in that a pivoting company will keep its core insight but use it in a different way. A jumping company changes everything entirely and loses the important lessons it learned from its partial failures. When a company pivots, you might move from one implementation to another, from one customer segment to another. You might decide that only one part of your insight is valuable and separately market that one part. Jumping is when you don’t have anything to stick to.Further ReadingHow to Plant a PivotPivoting has been implemented to great success – at companies like Intuit, DropBox, Wealthfront, Votizen, Aardvark, and Grockit – within the startup community, and these principles have also gained a foothold in elite business education at institutions like Harvard. But how does one go about doing it? Steve Blank provides Blue River Technology as an example of how to successfully pivot. Their company vision was to build robotic lawn mowers for the commercial space. “After talking to over 100 customers in 10 weeks, they learned their initial customer target – golf courses – didn’t value their solution. But then they began to talking to farmers and found a huge demand for an automated way to kill weeds without chemicals.” Meeting that demand became their new product focus, and the company obtained a great deal of venture financing shortly thereafter. Blue River maintained product vision while pivoting toward a slightly different market to build a successful business plan.- Eric Ries demonstrates 10 particularly successful ways to pivot.- Still not sold on the pivot? Check out these huge, booming successes.Why Pivot?While passion and determination are attributes that are essential in order to drive a vision to its full potential, if left unchecked, they can also turn the process into a faith-based one driven by dogma rather than empirical evidence. By executing the “pivoting” strategy, entrepreneurs can systematically test and refine their initial visions against specific success measures using empirical evidence, thus improving their odds of success.Entrepreneur and author Ash Maurya also finds that “too many founders” carry their hypotheses in their heads alone, a strategy that is the fastest way to iterate, but one that does not provide an enriching feedback cycle to test and refine their ideas. Additionally, he writes that entrepreneurs generally start out by devoting considerable time detailing business plans reflecting their initial vision, a form of waste since these initial plans are largely built on untested hypotheses.The truly powerful aspect of pivoting is not concerned with avoiding waste, however, but instead with preventing premature scaling. “After analyzing surveys from 3,200 startups [researchers found] that of the majority of startups that failed, 70% fail because of premature scaling.“ Each of the unfortunate 70% of companies failed to perform pivoting iterations and scaled a flawed business models prematurely. Tunnel vision and not gathering user feedback are also fatal flaws for most startups. Finally, it may take a lot longer than originally expected to tweak the initial product based on user feedback. The takeaway from all these entrepreneurs’ experiences is that “while you should be obsessed with your company’s mission, [you should be] willing to change your company’s approach given new data or circumstances.”Might as Well JumpThere might come a time when so many of your hypotheses fail that you must, in fact, jump. Vinicius Vacanti, co-founder and CEO of Yipit, says, “hopefully your iterations will take your project to where it needs to be to take off with your audience. However, if you are iterating, your metrics aren’t improving and you’ve run out of ideas on how to address your users’ concerns about the product, it’s okay to throw in the towel and start working on a new project. You’ll have learned a tremendous amount from your first go around and will be in a much better position to make your next idea successful.” You may also have times when data is fooling you, and you should stick to your guns. While there is no golden ruler for determining whether you are in either situation, measuring your hypotheses and being ready to pivot should the need arise allows your the clarity of vision to be flexible, and thus successful.Recent DiscussionsUser's Welcome To The Unicorn Club: Learning From Billion-Dollar Startups | TechCrunch - "The big pivot after starting with a different initial product is an outlier." Steve Blank's response.Related Quora Threads1. Venkatesh Rao's and John Greathouse's answers to What is pivoting?2. User-12288028583615180930 and Praveen Rajaretnam present great examples of pivots in their answers to What are the most classic entrepreneurial "pivots", a la Groupon?More examples: What's the best pivot in business you've ever heard?3. Jeremy Liew's and Brenden Mulligan's answers to How do startup founders know when to quit, stick or pivot?4. William Pietri's and John Greathouse's answers to What percentage of startups pivot their business model?5. Marc Andreessen, Mark Suster and Brad Feld onShould an entrepreneur reconnect with VCs that have passed on a business model prior to a successful pivot? When VCs ask to be "kept in the loop" are they interested in updates, or is this a polite brush-off?Referenced WorksSteve Blank. “How the Lean Startup Changes Everything.”Chubby Brain. “Why Startups Fail – Top 20 Reasons.”Furr, Nathan. “#1 Cause of Startup Death? Premature Scaling.”Jerry Jao. “The Art of the Pivot and How to Cut Your Losses and Move On.”Maurya, Ash. “The Lean Stack.”Maruya, Ash. Running Lean, O’Reilly Media. 2012.Quora. “Why Do Startups Fail?” (note Bernard Moon's and Yuri Sagalov's)Eric Ries. “Pivot or Perverse”Nicholas Thomas. “11 Startups That Found Success by Changing Direction.”TNW. “Why Startups Die.”Vacanti, Vinicius. “When Do You Throw In The Towel?”Wikipedia. Lean StartupBenjamin Yoskovitz. “When Is It Time To Pivot or Quit?”Zwilling, Marty. “Top 10 Ways Entrepreneurs Pivot.“