As a business progresses beyond its startup phase, it becomes crucial to regularly update its planning based on the knowledge gained from running the operations … building on what happened in the past. In order to know where you’re going, it’s best to start at a familiar point of reference … a benchmark … a baseline.
First Update Step: Start From A Reference Point
The updating process begins from the business metrics benchmark described by the previous plan’s KPIs, SMART goal results and any completed inflection point testing outcomes. By evaluating this reference point, businesses can determine if they are gaining traction or if a different approach is necessary.
If the benchmark results indicate a lack of progress, it is clear that a different approach must be considered. However, if the business strategy is deemed worthwhile, it is important to focus on specific areas of the business rather than abandoning the overall vision. Sometimes, a simple adjustment or tweak is all that is needed to overcome challenges.
Inflection Point Testing Step: Business SWOT Analysis
To identify factors that may be affecting the business, a SWOT analysis can be employed. SWOT analysis is a structured planning tool that evaluates the Strengths, Weaknesses, Opportunities, and Threats related to operating in a specific business environment. By utilizing a SWOT analysis, businesses can determine the advantages and disadvantages of the changes they want to make.
A SWOT analysis can be divided into two distinct parts: internal company environmental factors, including Strengths (S) and Weaknesses (W), and external environmental factors, encompassing Opportunities (O) and Threats (T). It is important to note that the external environment can be further categorized into industry … specific factors and the broader environmental factors outside the industry. By critically thinking about the business from both these perspectives, a comprehensive understanding can be gained.
Since no business operates in isolation, the context surrounding it determines the relevance of various attributes. The goal of the SWOT analysis is to identify a wide range of possible actionable outcomes.
This straightforward process demands attention to a variety of internal and external factors, leading to well-developed and grounded recommendations. Armed with the inventory of external and internal SWOT factors, generating recommendations to evaluate becomes significantly easier.
Final Step: The Business Model Update
The final step in the updating process involves a modified business model canvas (BMC) that provides a framework for visualizing and analyzing an existing company.
A business model describes how an organization creates, delivers, and captures value. Established businesses have a history that acts as the starting point for further development. However, the BMC is not suitable for startups as it assumes a linear and static process of creating and testing a business model, which does not align with the uncertainty and feedback loops that startups face.
The modified BMC consists of ten blocks. The ten blocks of the modified BMC are subsets of four major categories, color-coded on the canvas:
- The offering, which explores the value provided by your business.
- The customer category, focusing on the individuals or entities that purchase your product or service offering.
- The infrastructure, encompassing the resources and elements necessary for your business to succeed.
- The finance section, which outlines the costs and revenue generation methods of your business model.
By filling in these blocks of the modified BMC with the “blended data” from the reference point, SWOT analysis and the existing BMC, businesses can align their strategy and set SMART goals that will lead to success. In this way, the modified Business Canvas can reveal previously overlooked opportunities and highlight any flaws that may have been missed during the initial development of the business model.
This type of business update planning serves as a guide, requiring critical thinking about all aspects of the business, including an industry snapshot, go-to-market strategies, finance, personnel, and various operating procedures.
To facilitate this process, consider the following questions:
- What is the current state of the market for this product? (Considering supply and demand)
- What is our ideal customer profile?
- How do competitors fit into the market landscape?
- What sets us apart from the competition?
- What is our profit margin, and how do we plan to address debts?
- Do we have appropriate contracts in place?
- Is there a plan that extends beyond the initial launch?
Final Thoughts
By following this update planning process, companies can actively monitor the external environment, identify potential inflection points related to external threats or disruptive forces, and proactively respond to mitigate risks or seize opportunities.
By critically analyzing the “blended data” from the modified Business Canvas, key SMART goals can be identified for the company. It is essential to consider the indirect consequences of past choices, not just the direct consequences of current planning actions.
Once the modified Business Model Canvas update is complete, action milestones become evident for all employees involved. Always remember that the planning process itself is more crucial than the document writing. As Dwight D. Eisenhower famously said, “Plans are useless, but planning is indispensable.”
If you are planning to start a business or are thinking about scaling an existing one, be sure to read the ebook “Customer Centric Business Planning: A Guide to Optimizing Your Business for Maximum Success”. It is an essential book for business owners, managers, and entrepreneurs looking to leverage real-time insight to start and improve their business operations. Learn how proper customer centric business planning can assess risk and opportunity, and create an actionable roadmap for success.
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