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How to build a Lean business plan

April 9, 2020 by James Olsen Leave a Comment

Image by Tumisu from Pixabay

How to build a business plan – the Lean Canvas Model

Starting a business can be an all-consuming adventure that has the potential to be both very rewarding and very challenging at the same time. When trying to figure out what kind of Minnesota business you want to start and why you want to pour your life and soul into that business, there are some tools that can help. Ash Maurya’s Lean Canvas is one such tool that you can utilize to help you think through their business plan.

The Lean Canvas is broken into nine questions and is essentially a one-page business plan which according to the book Lean Analytics: Use Data to Build a Better Startup Faster, was inspired by Alex Osterwalder’s Business Model Canvas.

This one page canvas can assist you in assessing your risks, rewards, and trade-offs. While the Lean Canvas has nine simple, but provocative questions for you to ask yourself, JTO Legal has added a tenth in order to help you further think through your business plan.

The Ten Questions:

Here are the ten questions that you should be asking yourself prior to making real investments in starting up a new business:

  1. The Business Problem: What are some real needs and problems that are crying out for solutions for people today, and how does your business expect to address those problems for them? If there are already solutions, that are good, you need to determine if they are indeed viable alternatives to what you want to provide. If there is no clear business problem for you to solve, you are already in trouble.
  2. Customer Segments: Who are your targeted customers and market segments? Your message must reach out to these groups in a clear and concise manner.
  3. Unique Value Proposition: Is your elevator pitch clear, distinctive, and memorable? Remember, if it is not compact, or if it cannot explain why you are different or better than the competition, AND make people remember it, then you may need some help crafting that message.
  4. Solution: Are you able to adequately provide solutions to your target customer and market problems? What capabilities do you provide that someone would want to pay you for?
  5. Channels: What is your pathway to customers and how will you get paid? A business without customers, is not a business, it is research.
  6. Revenue Streams: What are your sources of revenue? Knowing how much revenue you think you can get is important, but knowing how often and at what intervals or frequency those revenue streams provide real cash is critical. A business needs money to make money, so a clear plan to manage cash flow is critical to success.
  7. Cost Structure: What are your fixed and variable costs? Initial start-up costs are only a part of a good plan, knowing how cash is used each month will make for a successful business plan.
  8. Metrics: How will you measure success and how will you track that measurement? This is one of the most critical elements to consider. Enthusiasm often biases perception, and real metrics keep you honest. Knowing them in advance will make you discipline enthusiasm with reality, and make for a more profitable business.
  9. Unfair Advantage: What gives you the edge? There is one thing that will separate your business from the pack, and you need to make that clear to everyone.  Your business needs to have a clear view of its competitive advantage.
  10. Timeframe: What does your timeframe for success look like? Many great ideas die because they take too long to get to market. You need to know what you must accomplish at various intervals (over 30 day increments, quarterly increments, etc.) Defining targets you need to hit by each interval is what a plan is for.

Creating a visual one-page business plan that answers these questions and posting it by your computer to remind yourself daily of where you are headed as a business will help you evaluate your success and constantly strive towards it. Without a plan, it is easy to lose focus and flounder. Danger lies not only  in the enthusiasm of a great idea without a business plan, but also a business plan without true measures of execution effectiveness. That is why measuring your plan is critical.

As the saying goes: Proper Prior Planning Prevents Poor Performance! So get drawing on that whiteboard, break out Visio, or print out a word document that reminds you of your ultimate vision – then track reality against expectations with real metrics. If you do, you will be more successful and less stressed in the long run!

Legal advice can be crucial during the start-up phase. JTO Legal is available as a resource for guiding your business. So, if you would like to learn more about starting a new business, please feel free to contact the firm at our Contact page.

Filed Under: Uncategorized Tagged With: Business, Business Plan, Lean Canvas Model, Startups

Are You An Independent Contractor Or Employee?

March 6, 2020 by James Olsen Leave a Comment

Image by Gerd Altmann from Pixabay

If you run a business in Minnesota, one the issues you need to consider is the proper classification of workers – independent contractor or employee?[1] These classifications describe two different working relationships, each with its own sets of duties and responsibilities. It is important to make the correct classification. Employers who mis-classify workers can end up with a substantial tax bill and even a lawsuit on their hands.

So how can you tell the difference? The answer—like so many legal questions—is that it depends. It depends on what analysis you are looking at. The IRS has one set of analysis. The State of Minnesota has another. As a business owner in Minnesota, it is important to consider both federal and state rules.

Federal (IRS) Test

First, let us look at the IRS test. Courts have considered many factors when determining whether a worker is an employee or an independent contractor. Generally speaking, these factors can be grouped into three categories: behavioral control, financial control, and the relationship between the worker and the employer.

Behavioral Control. Factors that indicate whether an employer has the right to control how a worker performs the work for which she was hired include: a) instructions given by the employer to the worker, and b) training the employers give to the worker.

The key consideration is whether the business has given up the right to control the details of a worker’s performance. For an employee the answer is no. For an independent contractor, the answer should be yes.

Financial Control.  Factors that indicate whether an employer has the right to control the business aspects of the worker’s job include: a) the extent to which the worker has un-reimbursed expenses, b) the extent of the workers investment, c) the extent to which the worker makes service available to the relevant market, d) how the employer pays the worker, and e) the extent to which the worker can realize profit or loss. 

Independent contractors are more likely to have un-reimbursed expenses,  to have significant investment in the facilities she uses to perform her work for employer, to advertise her services in the relevant market, be paid a flat fee, and have an opportunity to make a profit or loss on her work.

Type of Relationship between Employer and Worker. Factors that indicate the type of relationship between the employer and worker include: a) written contracts describing the relationship the parties intended to create, b) whether the business provides the worker with employee type benefits, c) the permanency of the relationship, and d) the extent to which services performed by the worker are a key aspect of the regular business of the company.

What really matters is the nature of the underlying relationship, not what the parties choose to call it. A true independent contractor will finance her own benefits of the overall profits of her enterprise.  If the employer offers work to the worker with the expectation that the relationship will continue indefinitely, rather than for a specific period of time or for a specific project, this may be evidence that the employer and worker intended to create an employee relationship. Finally, if the worker performs work that is a key aspect of the regular business conducted by the employer, this may be evidence of an employee relationship.

State of Minnesota Test

Now let us look at the State of Minnesota test.[2]  Minnesota case law has developed a five (5) factor test that allows an employer and worker to make some judgments concerning the appropriate classification of independent contractors or employees. The five factors are as follows:

  1. the right to control the means and manner of performance
  2. the mode of payment
  3. the furnishing of tools and materials
  4. control over the premises where the work was done
  5. the right of discharge.

The degree of control an employer may exert over a worker has become the primary factor to consider in Minnesota. If the employer has the right to control worker’s job duties, it is evidence that worker is an employee rather an independent contractor. Minnesota’s Department of Labor and Industry provides questions that are helpful in analyzing the control factor in a particular situation. The questions are not meant to compel a particular conclusion and should only be used as a guide.

Furthermore, in 1986 the Minnesota Legislature authorized the Department of Labor and Industry to further define the term “independent contractor”. The result was Minnesota Rules Chapter 5224, which contains guidelines for asserting independent contractor status for 31 specific occupations.  Comparing the worker at issue with these listed occupations is a way to start educating yourself.

To clarify, the purpose of this blog post is solely to flag a potential issue for business owners. It is NOT offering legal advice of any sort.  Should you have any concerns regarding this issue, feel free to contact JTO Legal through the website.


[1] The terms “employer” and “worker” are used in the following information and are not to be given a literal meaning nor do they correspond to the “employer” and “employee” as defined in the Minnesota Workers’ Compensation Act. They are used as a manner of convenience to distinguish between one who pays to have a service performed and the one who is paid to perform the service.

[2] Minnesota makes a distinction between independent contractors in the construction business, in the trucking and messenger/courier service, and other occupations. Here we address only the “other occupations” test.

Filed Under: Uncategorized Tagged With: Employee, Independent Contractor, IRS, Minnesota, Worker

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