For an entrepreneur, creating a business plan is a complex and laborious challenge. With a one-page business plan, you define the core issues of the plan so that writing a complete business plan is simple and straightforward.
Heikki Immonen, Karelia University of Applied Sciences
- If you are applying to the Draft Program(r), please attach the New One-Page Business Plan (.docx) to your application.
- Do you want to make sure you master the basic concepts of a simple business plan? Test your understanding with these instructions.
One-page plan helps you to create a complete business plan
A one-page business plan is a tool to help you outline your business plan as a whole.
Once you’re happy with the one-page version, you can easily work out the detailed plan required by the funders. One-page plan is especially useful during the idea development phase because any modifications are easy to implement. You don’t have to throw away pages and pages of written plan.
For example, in the Draft Program, one-page business plan is a key tool to help the team and coaches involved outline the business and the development process associated with it.
The four main areas of the one-page business plan
The new one-page plan has four main areas that correspond to the four classic areas of a business plan. The first three areas: resources, product, and processes describe the intended business.
In the fourth, Development section, you critically evaluate your business idea and plan, and sketch out the implementation schedule.
These main areas are further subdivided into 3-4 smaller sub-areas.
The title of the business idea
The classic way to describe a business idea in one sentence is to tell what is being sold and to whom. Often this sentence is clarified by telling what is being sold, to whom and for what need.
Example:
“Restaurant Hieno, is a restaurant for family and business parties, for those who want the best quality.”
Another way to write the title of the business idea is to write it in the form of a so-called one-liner. One-liner is a compact expression of the idea used in marketing that immediately tells a person what the product is for, how it solves the problem, and what benefits the customer will see from resolving the problem. [1]
This one-liner-type title follows the age-old basic structure of storytelling.
Resources
The most important resources for a start-up company are the company’s founding team and other resources already at their disposal. It depends on the resources what the company can actually do and how well.
Team and team goals
At the heart of any new business start-up is a team. Because starting a new business is never a straightforward linear process, team members must be really committed to the development process.
The expertise and experience of the team is important because so many other aspects of the business plan depend on it. It is also worth discussing the role of each member in the development process in advance. Once the role is clear, it significantly reduces the friction of cooperation, as everyone knows what to expect from the others. [2]
Team goals. When considering a new business idea, one often forgets to think about one’s own personal goals for the future business.
The danger is that without clear financial goals, you will end up creating a small and nice business, but one that will not be able to financially satisfy you as an entrepreneur as desired. It’s easy to create a business that earns you a few hundred a month, but much harder to create a business that earns you a living and helps you prosper!
From income perspective large enough business may require completely different solutions than a small hobby-like business would require. For this reason, it is good to keep the financial goals in mind. [3]
It is also worth considering what other dreams are connected with the new business. For example, do you want more free time or work where you can express yourself better?
Other resources
Depending on the stage of your business idea development process, you may already have a variety of necessary resources as well as a collection of important milestones reached. For example, have you already tested your service with pilot customers? Do you already have the tools to make the products?
It is important to be clearly aware of these achievements, and to record them. What has already been achieved is very important when planning what can be done next.
A bird in the hand is worth two in the bush.
How much work you have already done on the business idea is a signal to yourself and others that you are motivated by this business idea and have the ability to take action. [4]
The missing resources depend above all on how you plan to organize your production and sales and marketing, and what resources you already have for these. Do you need employees or partners? Are you missing a website? Should you apply for a trademark? And have you already found a subcontractor to manufacture your product?
The basic activity of starting a new business is to acquire the missing resources. Entrepreneurs who build business ideas with the resources they have do not have to interrupt the implementation of the business idea due to lack of resources. [5] For example, to set up a new ice cream van, an entrepreneur must obtain at least a vehicle, ice cream to be sold, a cash register system, a sales permit and a hygiene passport.
Product
The second main area of one-page business plan, the Product, contains not only a description of the actual product or service, but also an understanding of the target market, i.e. customer needs and competitors.
Products & Services
Products or services are what you sell to your customers. By using your product or purchasing your service, the customer solves their problem that has prevented them from getting what they want (desire).
Your products need to stand out from the competition in order for customers to buy them. The difference depends on the price-quality ratio. The product or service must be at least slightly higher quality than other products or services in the corresponding price category. [6] Examples of good value for money are a shamelessly cheap product that is ok (good enough) or a particularly expensive product that is super good.
What are the important quality metrics for your customers?
It is also worth noting that from the customer’s point of view, cost or price does not only mean euros. Someone may be cheap in euros, but it requires a lot of time and effort invested from the customer. [7] For example, a snow shovel can be inexpensive, but using it to remove snow (a problem) to keep the yard clean (desire) requires your own time and effort.
New products or services that are affordable and particularly easy to use, though do not yet have the quality of more expensive options are called disruptive innovations. They can gain a foothold in the market by serving customers who cannot afford and / or be able to take advantage of expensive and high-quality alternatives. [8]
Customer need
Entrepreneurship is often misleadingly called self-employment. An entrepreneur should rather be called employed-by-customers. Namely, there is no business if no one needs your products.
Customers only give up their money if they have a real need. Remember that the need exists before your product, even if the customers themselves are not aware of it. [9]
Customer need is often presented as a desire-problem pair. The customer wants something (desire), but the problem prevents him from getting what he wants. A company’s product or service helps a customer solve or eliminate the problem, resulting in them getting what they want. Example: A customer gets excited about baking and wants to try a new recipe. However, he has a problem that some ingredients are missing and the store is far away. [10], [11]
In addition to the need, it is important to think about the area of operation of your company. The size of the operating area depends on how many potential customers there are. If the area is too small, your business may not be profitable. A potential customer is a person or organization that has the customer need that you have defined.
Competitors
Who are your competitors? Your competitors are the solutions and options that are already available to your potential customers. So the competition does not depend on your product, but on the customer’s need.
Competitors must also be defined as those options in which the customer does not purchase any product or service but solves his problem by using time and effort. So-called Do-It-Yourself solutions. [12]
For example, you can go to the store by taxi (paid service) or on foot (a free option, which, however, takes time and effort).
Processes
The third main area of the one-page business plan contains concise descriptions of the two main business processes, namely the production process and the sales and marketing process.
Production
What is the production process of your product or service? Where and how is the product manufactured? If it is a service process, what are the steps involved?
The difference between a business and a hobby is often that the business has invented a way to produce a product or service efficiently enough that it becomes more profitable for the customer to buy the product or service than to do it themselves.
One way to gain a foothold in the market is to make production innovations so that products or services can be offered at a lower cost but be still of reasonable quality.
Sales and marketing
By what means of sales and marketing do you make your customers aware of your products or services? How do you convince them that they should buy your product and that they can trust what you promise? How and where do they buy the product? [13]
Along with products and production, sales and marketing is the second cornerstone of business. Without a financially viable and efficient sales and marketing process, there is no business because customers are unaware of the existence of the product.
The basic question for sales and marketing is: How do I get enough customers so that the time, effort and euros spent on marketing do not become too great?
For example, an online ads can cost EUR 500, but it only brings in 2 customers, while a newspaper ad can cost EUR 1,000, but it brings in 5 customers. In this case, the cost of marketing per acquired customer is 500 euros / 2 customers = 250 euros / customer in the case of online ad, and 1000 euros / 5 customers = 200 euros / customer in the case of newspaper ad. In the case of a newspaper advertisement, the company would therefore have to spend EUR 50 less on marketing for each new customer acquired.
Development
Development is the last part of a one-page business plan. In here you evaluate everything else you’ve written before, the future of your business idea, and make a preliminary schedule.
SWOT
SWOT is a tool for thinking about the future. SWOT stands for Strengths, Weaknesses, Opportunities and Threats. According to the textbooks, a SWOT should be used in the early stages of a business idea, when the actual new business idea is not yet clear. In practice, however, for many start-ups, these early stages of business ideation are intuitive and less systematic.
You can use the SWOT tool to evaluate an already advanced business idea, too. Strengths are things related to resources, products and processes you have that you believe will be valuable, useful and competitive in the future. Weaknesses, on the other hand, are things related to resources, products, or processes that you don’t think will meet future requirements or that you can’t hold on to with certainty.
Opportunities are existing or emerging opportunities for new profitable business, especially those related to customer needs and the competitive situation, as well as regulations. A travel company can recognize a strong growth in the number of Chinese tourists in the future, which is why service and marketing in Chinese language may be a good opportunity to specialize in the future.
Threats, as opposed to opportunities, are issues that exist now or will intensify in the future, particularly in relation to customer needs and the competitive situation, as well as regulations that make the current business idea unprofitable. A good example of this is the example of a new competitor entering the operational area of your own company.
Uncertainties
Considering the uncertainties of the business plan is a very important step. If something is uncertain, it is not possible to plan large investments, for example. Some way must be found to dispel the uncertainty. These means include (market) research, testing, and (business) experiments. Focusing on the biggest uncertainties first has during the last couple of decades become a major practice of developing a new business idea [14]
Risk is an important investment or other decision for your business that involves uncertainty, and which is difficult to reverse.
What if customers don’t like the menu of your new restaurant? Are you sure there will be enough potential customers in your future area of operation?
Pre-orders are one timeless trick to reduce risk. In this case, the entrepreneur only manufactures the products when he has a sufficient number of pre-orders. [15]
From the perspective of risk mitigation, business ideas and teams in which team members have first-hand experience of both the production processes and the customer need are particularly potential. Their previous personal experience can be seen as a kind of pre-testing of the business idea. For this reason, spinoff companies are doing so well. In them, the product or service has been developed for the parent company’s own internal needs, but then it has been noticed that there may be a demand for this solution outside the parent company as well. [16]
Schedule
What is the timetable for moving from the current situation to the realized business vision? What are the main steps?
When thinking about the schedule, consider resources you are missing as well as your SWOT and risk analysis. First, focus on at least the most important risks.
In the Draft Program, we have learned that it is especially important to consider other aspects of team members’ lives when scheduling. The best chances for a business idea to become real are when the schedule is in harmony with other everyday requirements.
It is also an interesting observation that new entrepreneurs who start a business on part-time basis in addition to paid work also tend to be more successful. According to the researchers, the reason is that the merit of paid work gives the entrepreneur the courage and opportunity to change the original idea in hopes of an even more profitable business idea. Entrepreneurs who jump straight into the deep end are more likely to get stuck in a barely profitable business because it is their only source of income. [17]
References
[1] Miller, D., & Peterson, J. J. (2020). Marketing made simple: A step-by-step storybrand guide for any business. Harpercollins Leadership.
[2] Bar-Yam, Y. (2004). Making things work: solving complex problems in a complex world. NECSI, Knowledge Press.
[3] McGrath, R. G., & MacMillan, I. C. (1995). Discovery-driven planning. Harvard Business Review
[4] Steel, P. (2007). The nature of procrastination: a meta-analytic and theoretical review of quintessential self-regulatory failure. Psychological bulletin, 133(1), 65.
[5] Sarasvathy, S. D. (2009). Effectuation: Elements of entrepreneurial expertise. Edward Elgar Publishing.
[6] Somervuori, O. (2018) Miksä maksaa? Hinnoittelun psykologiaa. Docendo
[7] Fogg, B. J. (2009, April). A behavior model for persuasive design. In Proceedings of the 4th international Conference on Persuasive Technology (pp. 1-7).
[8] Christensen, C. M. (2013). The innovator’s dilemma: when new technologies cause great firms to fail. Harvard Business Review Press.
[9] Christensen, C., & Raynor, M. (2013). The innovator’s solution: Creating and sustaining successful growth. Harvard Business Review Press.
[10] Dori, D. (2019). Model-based Systems Engineering: Advanced Approaches with OPM. edX online course
[11] Miller, D. (2017). Building a storybrand: clarify your message so customers will listen. HarperCollins Leadership.
[12] Christensen, C. M., Hall, T., Dillon, K., & Duncan, D. S. (2016). Know your customers’ jobs to be done. Harvard business review, 94(9), 54-62.
[13] Osterwalder, A., & Pigneur, Y. (2010). Business model generation: a handbook for visionaries, game changers, and challengers (Vol. 1). John Wiley & Sons.
[14] Reis, E. (2011). The lean startup. Penguin
[15] Blank, S., & Dorf, B. (2020). The startup owner’s manual: The step-by-step guide for building a great company. John Wiley & Sons.
[16] Jacobs, J. (1970). The economy of cities. Vintage.
[17] Raffiee, J., & Feng, J. (2014). Should I quit my day job?: A hybrid path to entrepreneurship. Academy of management journal, 57(4), 936-963.
In cooperation
The writing of this article has been supported by the Tulevaisuuden Työ ESR project. The project runs from 1 October 2020 to 31 August 2023 and is funded by the ESS / Southern Savo ELY Center and Karelia University of Applied Sciences.
This article was published on 14.4.2022 and is a translation of the original article published in Finnish.