We all know the benefits of having a business plan, right?
Business plans keep you on the right track. They help you raise capital. They put you and your team on the same page. They give you a deeper understanding of your market. They establish benchmarks, and so on and so forth.
So why don’t you have one?
If television has taught me anything, it’s that there are only two ways that business plans are ever written depending on how large your organization is.
Big Business: Thirty-five lawyers, executives, and board members sitting around a giant mahogany table in a corner office, writing a 200-page business plan that no one will ever read.
Start-Up: Two young entrepreneurs sitting in a booth at a run-down diner in New Jersey, drinking a cup of coffee at 3 a.m. and scribbling out a business plan on the closest available napkin.
Well, folks… television lies.
You don’t have to spend months authoring it as if you’re developing a constitution, and it doesn’t need to be carelessly scratched onto a coffee-stained doily.
Below you’ll find an easy way to create a thorough, yet flexible, business plan in less time than the episode of “Vanilla Ice Goes Amish” that you just finished.
On a side note: Really, HGTV?!?! Vanilla Ice Goes Amish?!?! You’re better than that.
But I digress.
How I Bought, Rehabbed, Rented, Refinanced, and Repeated for 14 Rental Properties
This is the dream right? Going from zero to 10+ rental properties, providing stable cash flow and long-term wealth for you and your family, and building a scalable business model to boot! Learn how this investor did just that, in this exclusive story featured on BiggerPockets!
Enter the Business Model Canvas
This mechanism is called the “Business Model Canvas” and was initially proposed by Alexander Osterwalder based on his 2004 work named “Business Model Ontology.” His particular method has gained enormous traction over the last few years and is proudly used by Fortune 500 companies, lean business start-ups, and MBA programs everywhere.
The Business Model Canvas simplifies the business plan into nine essential components:
- Value Propositions
- Customer Relationships
- Customer Segments
- Cost Structure
- Revenue Streams
By filling out each of the above sections within the Business Model Canvas, it allows the author to easily see the big picture. Instead of becoming lost in the details of each individual function, one is able to see the full scope of their business with clarity.
Talk Real Estate to Me
If you read the book The E-Myth Revisited by Michael Gerber, you’re probably pretty familiar with the concept of “working ON your business, not IN your business.”
Real estate is no different. Especially if you ever want to achieve scalability and a hands-off organization.
Therefore, I’ve put together an “Example Buy & Hold Company” Business Model Canvas below. Feel free to use it as a guide when creating your own.
Example Buy & Hold Business Model Canvas
Red – Applies to “Future Home Buyer” customer segment
Blue – Applies to “Renter” customer segment
Green – Applies to both customer segments
4. Value Propositions
5. Customer Relationships
7. Customer Segments
8. Cost Structure
9. Revenue Streams
Do you think the idea of the Business Model Canvas is awesome and you’re about to start right now? That’s awesome.
Do you think it’s stupid and far too “start-up” for your business? That’s cool, too.
Regardless of whether or not you choose the BMC or even one of the Business Plans located in the BiggerPockets FilePlace, there is one thing that you’ll need to do.
A Business plan, no matter which version you choose, does no good sitting in a drawer. Review it on a monthly, if not weekly, basis and change it as you see fit.
Best of luck and happy planning!
Investors: Do you have a business plan written out? What key elements did you include?
Don’t forget to leave your comments below.