Business Plans and Models
A lot of questions come to the WaterSHED team about our model, and if how we help to develop business plans for WASH enterprises. Beside the fact that as an NGO supporting private businesses, local government, and rural consumers WaterSHED doesn’t have a business model per se, we suspect that having too much focus on the theory behind market-based approaches –the model-could take away from the focus needed on the more important execution.
Recent posts by David Schaub-Jones on BPD and Brad Feld in the Wall Street Journal question the effort to develop a fully articulated business plan, not least because so many successful businesses either do not have – or have deviated completely from – an original business plan. In the case of WaterSHED’s Hands-Off approach to building WASH markets, the model employed by the vast majority of the successful WASH enterprises is extremely simple: ‘offer products that consumers want and can afford, and make them easy to access.’ These entrepreneurs are generally not inventing complicated new subscription services, engineering specialized ‘financing products’ for toilets and water filters, nor innovating technological leaps in toilet mechanics. Instead, they outperform their competitors due to superior execution: working hard, being organized, staying committed, respecting customers, and building relationships. Time and time again, it’s the effort of the people in a small enterprise that make or break it.
So how are investors and business owners supposed to evaluate new ventures without fully articulated business plans? Investors must put as much stock in the people as they do in the model. Mr. Feld’s “show me don’t tell me” mantra in the WSJ rings true for the team working on WaterSHED’s sanitation marketing program. Instead of making overly complicated business plans, the team rolled up their sleeves and worked with a few open-minded business owners to rapidly and iteratively test different product options, sales tools, marketing messages, etc. until finding the right mix. By really listening to existing business owners and target customers, the team was able to arrive at the principles behind the Hands-Off approach much faster, and tangible early success was the primary attractant for many new enterprises to join the fold.
This isn’t too say that business plans and models aren’t useful: I think going through the exercise of thinking hard about what you’re going to do and how you’re going to do it better than others remains critical. Many larger and more complicated businesses are also likely to benefit more from developing business plans and thinking about new models for doing business than are SME suppliers of toilet components. In retrospect, had WaterSHED asked its enterprise partners to draft business plans before working with them, I suspect we might have waited a long time before probably getting started to work with the wrong people (e.g. those whose first instinct is to write a long plan rather than get cracking).
If we focus time and energy on looking for the secret sauce in a business plan or whiz-bang breakthrough in a new business model, we might forget to look closely and try to understand how successful existing enterprises do it.
I recall the following anecdote: when asked how his country was able to achieve such a dramatic change in sanitation coverage rates in just a few decades (i.e. what was the secret element of the model that enabled a nationwide turnaround) a senior representative of the relevant Thai Minister explained: the secret was 25 years of hard work.