Business plan framework - "Who" is your customer

In the previous blog (part-1) "Framework for creating a Business Plan", I proposed an ontology (framework) to organize a business plan. In continuation of the previous article, we will examine how to structure information in the "who" column of the Business plan matrix.

Whats a business?

A business can be defined as an organization that provides goods and services to others who want or need them.

We can safely postulate that the most important "thing" for a business is its customers who "want or need" the product/service offered and "who will pay for the same". The identification and categorization of potential customers of a business is done in the "who" column of the business plan matrix. In this column, we also identify other key sets of people who are/will-be part of your business. For example - Partners, Employees, Suppliers, Board members etc.

Terminology and guidelines

Aritifact - An artifact is a work product such as a catalog (list of things), network diagram, a use-case specification, diagrams, a matrix, an office document, or even a hand written paper. Every cell in the business plan matrix contains one or more artifacts.

Lets now examine the artifcacts that go in the individual cells in "who" column of the business plan matrix. Each row is vantage point or perspective of the business that provides a different level of detail on the entities involved in the business. For example, If in the conceptual scope (row-2) you identified the need for a manager to run restaurant operations, in the execution scope you will list the qualifications of such manager and estimate salary ranges for different grades of experience.


Row-1 : Contextual Perspective
The cell in the first row is a reference perspective. Assume there are reference business plans spanning domains such as restaurant business, online portals, retail, online bookstore, training etc. These community contributed plans will serve as a starting point (reference) for anyone planning to start a business on similar model. For example, an "online music store" can use the "online bookstore" and "online portals" as references. The diagram below shows an example artifact for the restaurant business.

Reference - "Who" column for Restaurant business

Row 2: Conceptual Scope
This cell identifies all the sets of people who are likely to be involved with your business. The artifacts for this cell include -

• A comprehensive list of potential customers of your business (ex: Corporate customers, retail customers, college students etc.)
• A list of key employees/positions required to manage the business and to execute the business plan.
  
• A list of potential partners (types of organizations that you can partner with)
• A list of potential suppliers (or types of organizations that will serve your resource requirements)
• List of potential board of directors of the organization.
• List of venture funds who can bring strategic value to the business.

The artifacts for this cell are mostly documents with list of entries. These artifacts can be created as a list of handwritten papers, text documents, excel spreadsheets, schematic diagrams or even UML diagrams.

Note: If your product is a free web portal, then the users of your portal do not qualify to be categorized as customers, as they do not pay you for the services. However they are an integral part of your business plan. You can classify them as partners in the "who" column or as "assets" in the what column (explained in a subsequent article).

Row 3: Planning scope
In this cell you identify the attributes of the key people involved with your business. The attributes to be identified are those that are important to your business. For example, if your business is about online-dating, then attributes such as age, sex, demographics are important identifiers of your customers - you are likely to segment your customers as college students, single male, single female, metropolitan etc.

The following set of documents are likely to be created as artifacts for this cell -

• Divide your target customers into all possible segments (artifacts can be UML diagrams, text document, excel sheet or hand written)
• Identify attributes of the key employees of the business (example - experienced software architect, hotel management graduate, Management graduates from reputed business schools). This could be an UML diagram, or an office document.
• Identify 3-4 key partners and explain the value they bring to the business. If you cannot identify any names, attempt to list down attributes of potential partners (example - Reputed 5-star hotels, can provide access to high networth indiviiduals)
• Identify key suppliers for each type of resource you will require.
• If you have a large list of potential board members, business partners, create 2-3 best combinations that will enhance the value of the business.

By now you might have realized that filling the cells is an iterative process whereby you are likely to visit each cell several times or create several versions of the matrix before you have it all mapped out. Here is an example artifact identifying key employees/divisions for an online-dating portal business.

Row 4: Execution scope
In this cell you organize information from your virtual and real execution of your preliminary plans. For example, notes from the discussion you had with a potential supplier or partner or list of the salary ranges for the key employees (based on your research in the employee market). This information will help you fine-tune your planning. For example, if you realize that salaries for hotel management graduates are beyond your budget, you can change your plans to hire diploma holders instead for your restaurant business. The following set of documents are likely artifacts for this cell.

• Potential market size for each customer segment identified in planning phase. The artifacts here include summary excel sheet along with references to market research document.
• Market salary ranges for the key employees identified.
• Notes of discussions with potential partners, suppliers.

Row 5: Competition scope

• Identify the customer segments being served by your competitors.
• Identify the organization structure of your competitors (this serves as a reference)
• Identify suppliers, partners of your competitors.
• Identify the board members and the value they bring to the business.
• Identify the funding sources of your competitors.

Identifying and listing out important attributes of competition is a key step. It helps you not only in expediting your planning process, but also in improving your marketing pitch.

to be continued...