Guest Post by Sam Holloway from Crafting a Strategy
Business plans suggest that scale and volume growth are the best paths forward. If you’ve taken money from professional investors with goals of a strategic exit to AB InBev, then scale and volume growth are the best paths. However, what if you have a tasting room, your business partner is also your life partner, and you want to grow to achieve some economies of scale but not grow so much as to take the fun and happiness out of your day to day life? What kind of decision-making and strategic advice should you follow?
We believe the business model paradigm gives entrepreneurs another choice if scale and blindly pursing growth doesn’t sound appealing. If happiness, profitability, slower growth, and creativity are important to you, using a multi-business model approach is a better way to think about your craft beer business. Here are the key differences in shifting from the business-planning paradigm to the business model paradigm (Adapted from Schlesinger, 2009):
|Old Paradigm – Business Plans||New Paradigm – Business Models|
|Predict the Future||Control the Present|
|Market Research||Market Entry and Experimentation|
|Full Scale Marketing Plan||Short Term - Hypercycle Plan|
|First to Market||First to Mindshare|
|Be Secretive and Be Perfect: Hide in your office conducting market research, write the perfect business plan, only enter the market after securing outside funding||Fail Fast and Fail Cheap: Talk to everyone, get outside the building, launch the business as soon as possible, experiment, fail cheap, learn, try again|
|Upside market potential drives business plan funding needs||Downside market risk drives business model needs|
|Return on Investment||Affordable Loss|
To learn more about this topic and to talk to Sam Holloway in person, be sure to attend the Craft Beer Finance & Investment Conference in San Diego on August 24 & 25, 2016! Sam will be kicking off the second day of the conference with a talk on “Craft Brewery Business Design: Trade-offs between Scale, Creativity, Happiness and Profitability”.
Comparison Table Adapted From Len Schlesinger (2009). Babson College Innovation Associates, Inc. Conference Presentation.