There have been many developments made in recent years in the development and explanation of a start-up’s business model. Why is it that business plan templates and business planning software ignore these developments? This leads to sub-optimal business plans that don’t communicate as effectively as they should.

The old paradigm

The 4P’s of marketing have been very effective over the years, however they no longer adequately explain the complexity of business models that are evolving as a result of the Internet. This old paradigm was developed in a different era and unfortunately seems to form the basis of all the existing planning software and templates available globally. Some leading consultants are moving beyond the limitations of these approaches, however very few business owners and founders have access to this technology. There is an increasing need for founders to explain their business model in terms that others can understand. These business models are not always oriented around profitability but may be oriented around the growth of a network of users.

The interplay of relationships and interconnectivity of businesses as increased dramatically over recent years. Specialisation has played its role in creating a more interconnected series of relationships between people within the marketplace. Existing software and templates do not adequately explore these relationships and the interplay between profitability and revenue.

Towards a new paradigm

In defining a business model, it should explain the relationship between an organisation’s strategy and the financial outcomes, in other words it outlines how the strategy is translated into cash. This is a particularly important element of a business plan from an investor’s perspective.

Many recent developments by a leading figure in business model design have fundamentally altered the structure and nature of a document. Leading investors are well aware of these improvements in the process however many of these improvements have not yet filtered down to business founders and even consultants providing advice in this space.

There are 9 key business planning elements that must be specifically addressed in order to articulate a business model. The founder must take the reader through a journey between each of these 9 elements. At the heart of a good business model is a value proposition. In modern planning the value proposition should replace the vision and mission statements used in traditional business planning approaches.

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A worker shortage might be excellent news for the economy! Maybe, just maybe, firms will awake and see workers’ substantial contribution to their success. Some CEOs take unconscionable sums and destroy their firm’s value, unlike many frontline workers who create value. During the pandemic, CEOs took vast sums as they laid-off workers. Some firms sought bankruptcy protection, but hat didn’t stop their greedy CEOs from snatching hefty bonuses.

We have a worker shortage and firms are scrambling to hire whomever is willing. Some firms, like McDonalds have paid signing bonuses. Canada’s Loblaw and its competitors paid a bonus to frontline workers when the pandemic began. They stopped it after three months in unison with their competitors. When government confronted them about this collusion, they claimed it happened independently. Go figure! It’s like you caught your three-year-old with her hand in the cookie jar and she said, Mom, “Cookie Monster did it!”

Worker Shortage Inevitable With Shoddy Treatment

Loblaw’s behavior disturbs me. During the bonus period, profits soared. Per se, that’s no problem. I favor firms making profits. To be sure, I am against government taxing profits. But paying workers the bonus during the pandemic shouldn’t hinge on profits. It was just right. Meanwhile, my wife and I shopped at a Loblaw store and workers continued their excellent service despite Loblaw’s slight.

Leaders must realize frontline workers are the firm’s foundation and treat them well, not as cogs turning out CEOs bonuses! When employers treat workers like machines, they disengage. Gallup said, over several decades, they and other researchers found a strong link between employees’ workplace engagement and the company’s overall performance. Yet employers refuse to accept this. But there is good news: surveys show some firms break the mold and treat workers with respect: Cisco, Apple, Accenture, IBM, FedEx are a few.

Next Quarter’s Earnings Drives Businesses

Companies see next quarter as the prize, so they exploit workers and fudge next quarter’s numbers. I repeat: I am against government taxing business. However, I favor the Biden Build Back Better provision to tax share buybacks that the House passed, and it is before the Senate, even if it might have only a modest effect on share buybacks. Companies shouldn’t be spending billions buying back shares while exploiting workers.

Firms should present to shareholder meetings options to use buyback funds. Choices might include effects of paying bonuses to frontline workers with buyback funds. Shareholders should hear about potential strategic investments, too. Another option is stopping buy-backs for five years after layoffs. Executives, too, shouldn’t get bonuses within five years of layoffs. We must get rid of worker exploitation that enhances CEO bonuses.