I’ve been watching the YouWin competition with avid interest, and I recently decided to do a series on business research alongside the other business plan related articles. Why business research? Well, the purpose of a business plan is to have a structured guide to help examine the risks involved in the business that you are looking to get into. A common misconception is that business plans are used to get funding, but that is only a side effect. Imagine going through the whole process of registering your business, getting your first production run, spending money to promote your brand and after all this hard work you realize that it isn’t as profitable as it looked like from the outset. Presenting that scenario isn’t to imply that going through the process of writing a business plan will mean that you will avoid all that, it just means that you will more than likely have a mitigation plan in place i.e. you are not blindsided.
So what is research anyway? Research is the process of searching for information to help you answer the critical questions that you need answered. Some such critical questions in this context are:
- Is the problem I’m trying to solve actually a problem?
- Who are the people who are experiencing this problem the most?: The answer to this question will give you an idea of the potential customer base.
- How are these people currently solving this problem?: The answer to this question will give you information as to who your competition is.
These are just examples of some of the questions you will need to answer to determine how risky the business model you are embarking on is.
There are two types of research, primary research and secondary research. Primary research is research that you collect yourself. Examples of such research are experiments, surveys et al. Secondary research is using primary research that has been collected by others, this is when you cite the work done by others.
Whether it is primary or secondary research the goal is to use the data to answer your questions. Next week we will start to discuss some questions that need to be answered to fully address the requirements of the previously discussed business plan sections.
Going from the Canvas to the Plan
The key resources cover a lot of ground on the business plan. Your resources are all of the inputs that go into producing, marketing and delivering your offering. Anything that requires resources should have been listed here, and that should in turn translate to the business plan. The sections that correspond to the key resources canvas block are listed in Table 1 of Part 1, but for the sake of redundancy you will need to detail the resources required to execute your:
- Description of Venture: In the description of venture you need to outline the resources in your canvas block are currently at your disposal.
- Productions plan: The production plan will need to contain all your production related resources. This means land, labor, and capital
- Operations plan: The operations plan details all the resources that are required to execute smooth operations.
- Marketing Plan: Your marketing plan will require resources to execute. These resources might be the broadly stated human and infrastructural resources on your business model canvas.
- Organizational plan: Here you will detail your human resources, what role they play in the organization, the requirements that you have for filling these roles, if you have filled these roles, and if you haven’t how you plan to fill those roles.
- Financial Plan: Key resources come with costs, and these costs need to be detailed in your financial plan.
Your key resources don’t necessarily come from within your walls; some of these resources can be acquired through partnerships with other people who have access to these resources.
This canvas block lists out the core activities that are conducted by your company to deliver your value proposition to your customers. The activities listed in this block will feed into the following sections of your business plan:
- Description of Venture: In this section you will put the list that you have in the key activities canvas block in sentence format. Bottom line, you summarize the key activities that your organization is engaged in.
- Productions plan: The key activities that are related to your production processes will be detailed out in this section of the business plan.
- Operations plan: The key activities that are related to the operations portion of your business will be detailed in this section.
- Marketing Plan: The key activities that are primarily marketing functions will be described in more detail in your marketing plan.
The key partners also cover a lot of ground on the business plan.
- Production plan: Partners that are identified as influencers and their roles in your production process need to be identified here. Your production plan requires inputs. It requires raw materials, equipment, and people. The people might need to be part of your organization (key resources), but you don’t necessarily need to own the rights to the raw materials or the equipment. Equipment can be leased if you have access to such loan mechanism and the raw materials need to be bought of someone upstream of your location of the value chain.
- Operations Plan: Partners that are identified as influencers and their roles in your operations need to be identified here The activities that go into your operations plan can fall into a similar pattern as that of your productions plan i.e. what do you need to keep in house and what can you outsource?
- Marketing Plan: The partners that help you execute your marketing plan should be listed here.
- Assessment of Risk: Every business involves an element of risk, and a business plan needs to list out how you mitigate those risks. Risk mitigation involves resources, activities, and in some cases partners. The partners who play a role in your risk mitigation strategy need to be included in this section. One thing to note is that your partnerships might also be a source of this risk. An example of one such scenario is if you intend to start productions using raw materials from one supplier; this partnership is risky because you will be adversely affected if they cannot fulfill their supply obligations to your company.
Anything that costs you money need to be acknowledged in your cost structure; you can identify the components in the canvas blocks that cost you money and then look in the corresponding business plan sections that would have been written by the time you get to this point to get details on what these numbers need to be.