New business plan models to support growing entrepreneurship spirit in BiH

By Erol Mujanović, employment  and entrepreneurship expert

With a long lasting and increasing rise in youth unemployment all over the EU, and especially in Bosnia and Herzegovina, very few measures and activities can really help young people to develop their skills and earn a living. One of them is entrepreneurship. The creation of companies in order to realize business ideas, visions and dreams, is one of the rare fields where talented young people can fully express their potential and creativity but also employ a number of other young people. Just to stay within BiH borders, think of Posao.ba, Klix.ba or Krompir.ba that started as a 1 or 2 man business. Through seriousness, focus and dedication, today they employ, directly or indirectly, more than 25 people each and are considered as the best practice cases all over the region. Of course, there are also other great examples.

While writing on entrepreneurship, there is a double purpose to this column. Firstly, to draw attention to one recent trend in writing successful business plans where a several decades long paradigm and business plan model are completely changing now. Secondly, to highlight the fact that entrepreneurship seems to be literally exploding in BiH with more events and start up competitions and conferences taking place in the last two years than in the ten years before that. The data still has to confirm this trend, but the fact is that in only two years, the prestigious worldwide start up competition and brand “Start-up weekend” spread from Banja Luka to several other cities in BiH, allowing the creation of several start-ups and the launching of great business ideas. The trend is particularly noticeable in Sarajevo that will host in July its second Start up weekend as well as some very prestigious and successful practitioners from Google and other well-known companies on that occasion.

Regarding the first point, a change in global business starting practices, the latest number from prestigious Harvard Business Review confirms that the lean start up methodology is replacing the old and traditional ways of starting business.  We have been taught we have to write a business plan, present it to investors, create a team, and introduce the product and then start selling.  As a result of that approach, 75% of start-ups simply fail because they were disconnected from the market and were unable to hear customer needs on time.

The lean start up model prefers permanent experimentation to elaborate planning, valuable customer feedback to intuition and guessing, etc. The methodology is only a few years old but some of its key terms, such as “minimum viable product”, already took a central place in entrepreneurship courses taught in the world’s best universities. The idea is to test the product as soon as possible and, if necessary, to fail rapidly but to learn and improve for the next step that comes immediately after the failure. The lean method has three key principles and several significant differences when compared to the traditional model. First, instead of writing for months a business plan 50 pages long, founders write only a business model canvas elaborating nine key elements (partners, activities, value proposition, cost structure etc.). Then, the lean start-up companies face the customer rapidly by assembling the minimum viable product to be tested and with this priceless customer feedback the company revises its assumptions. Finally, perception of failure, financial reporting and the entire strategy are very different between these two approaches.

This is very important for BiH as well because, among others, a very difficult economic situation leaves to young entrepreneurs even less space for experimentation comparing to the majority of their western counterparts.  Also, as one of the worst European countries in terms of entrepreneurial spirit and start up creation, BiH has at least the opportunity to do things well since the beginning since entrepreneurship is not yet developed as it should be.

With the creativity of young Bosnian entrepreneurs, good examples of the implementation of new trends and practices are not missing. Emil Hajric, a 20-year-old bright Bosnian entrepreneur, with whom I had a chance to talk to couple of weeks ago, skipped college to be an entrepreneur. With several complete business failures, in only a few years Emil has become the best example of the lean start up methodology implementation since he learned quickly from each failure and adapted his business idea according to the market needs. He also demonstrated an exceptional level of focus and confidence that is rare for any person and very few would have been able to stand up again after being knocked out 4 or 5 times. Emil did. The prestigious Forbes called him “a 19 years anti Yahoo wunderkind”, and together with many other business experts, predicts a great future for this young Bosnian.

This country has other similar entrepreneurial talents that have emerged during the occasion of the latest start up competitions and conferences.

To summarize key points, new companies have bigger chances to succeed by replacing the old fashioned, intuition or theory based, heavy business plans with a more dynamic lean start up approach where they don’t execute the chosen business model, but instead permanently create one business model.

The business model canvas is a short document assembling 9 key building blocks of the new business and this is to be used.

Since there is a noticeable growth in entrepreneurship activities and events in Bosnia and Herzegovina, it is very important to share and teach these best practices to future entrepreneurs because the lean start up approach seriously reduces the risk of irremediable failure.

Why is it important? As pointed out in the Harvard Business Review article, the first hundred years of management education were oriented towards strategies and tools for existing companies. In the 21^st century different market forces are bringing the pressure of rapid “change or die” situation for all types of organizations (governments, private sector, NGOs, etc.). The lean start up approach can help all of them successfully embrace those changes.