KNOW-HOW – Innovating Business Planning

Business_models_icon_71pxAn inclusive business is like any other business: it needs a good business strategy to succeed. Experience from the Facility and IAP portfolios so far highlights just how much attention business plans require to ensure the business meets both commercial and social objectives. So what is different about business planning in inclusive business?

  • Achieving viability: Many great ideas don’t’ go to scale because the sums don’t add up. Finding the right production, pricing and distribution model that fits the particular context at the base of the pyramid is the crux of the matter. Several projects have requested support from the Business Innovation Facility and IAP to tackle these.
  • Going beyond the sums: We see a tendency to mistake business planning for just a pricing strategy or cost structure. The other core elements, including a defined value proposition, understanding of the market, a targeted customer base, and appropriate delivery partnerships are just as important. But may get neglected, particularly by a start-up that is trying to make ends meets.
  • Incubating innovation: Inclusive business is inspired by innovation. But innovation is not just a matter of luck. In the wrong business environment, innovation stalls, while attention to leadership, learning and company structures can nurture innovation. What triggers innovation and how can you build it into your business model? These are the tricky questions that projects in the BIF and IAP portfolio are tackling on the ground.
  • Securing finance: Access to finance is a major constraint, but being investor ready depends on both having a sound business plan, and finding the investor that matches your business. For an inclusive business, there may be new potential sources of finance like donor support or impact investment, but tapping into them is not always easy.
  • Setting targets: Key performance indicators provide incentives for staff and information for management. They have a strong influence on what gets done. Inclusive businesses are increasingly recognising that they need to adapt their existing key performance indicators to fit the objectives of their inclusive business model, which may go well beyond the financial numbers.

For example, with support from the Business Innovation Facility pilot programme:

  • Jita (Bangladesh) used scenario modelling to explore how shifting the business model’s emphasis on social impact (more marginalised women) and commercial return (faster break-even) would affect business outcomes. Jita also explored how to adapt key performance indicators to ensure combined commercial and social targets are on track.
  • In Zambia, iSchool and Healthstores have assessed the market for online education tools and rural healthcare centres respectively by looking at consumer demand, willingness to pay and potentially engaging with government or donors as major clients.
  • Furniture Village in Nigeria is using the industrial cluster model to develop opportunities for this furniture manufacturing business to go to scale and to replicate within other sectors.

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