This was the question posed on the McKinsey Quarterly forum. The responses were as you would expect: a litany of things a business model (plan) should do.
Yet, there is another family of generalities not addressed and which I find typically overlooked.
Yes, if you’re writing a business plan, defining your business’ model, there are a few things a basic business plan needs to address:
- What must it do?
- How must it do it?
- Where is it done?
- When is it done?
- Why?
Here’s what is missing: Just as important, arguably more so, is addressing what the business is NOT:
- What must it not do (if only for now)?
- How should it not be done?
- When should it not be done?
- Why not?
The NOT component is very important. I speak to entrepreneurs about this monthly, at Ann Arbor SPARK events, and put the opening segment into a post, "Even a Piece of String Will Do."
For instance, as a product manager I may educate the Sales team about a new product offering. I may describe the product as being for customers generating at least $250M/yr gross revenue, in three industries (x,y,z), and typically having at least 1,200 employees. While I told them where the product’s focused, equally important, I told them where -not- to waste their time.
A good business model, a good business ‘plan,’ is of greatest value to the owner/writer. Crafting it helps them work through the issues. It also gives a constructive platform from which to make ongoing decisions—rather than by the seat of their pants.
The best business model? "Having one” is a good place to start.
(photo credit: Steven Goodwin)
