Many budding entrepreneurs cultivate ideas for a business and as they share their idea with friends and family, their enthusiasm grows. When they eventually realize they need help, their passion for conquering the world in their chosen domain is intense. Ready to charge and knock down anything in their way, their minds are not open to suggestions that appear to slow them down. This is often true even if the suggested action is precisely what is required for them to succeed.
One of the fastest ways to quell this enthusiasm is to advise the entrepreneur to develop a business plan. Most new entrepreneurs don’t know how to write a good business plan and the prospect of spending weeks to compile a thirty five to fifty page tome is more than daunting. Unfortunately, many willing consultants and other parties are eager to jump in and develop the plan, often for a substantial sum of money. It is unfortunate because this expensive step is out of sequence.
Before developing a detailed for any business idea, the entrepreneur needs a process that helps him or her to assess the business model and market opportunity. A useful process will guide the entrepreneur through the core elements of the business model and provide an opportunity to adjust the assumptions before proceeding, or to conclude the idea is simply not worth pursuing. In just a few days, the entrepreneur will have a much clearer sense of the business model and potential. Empowered with this knowledge they are better able to communicate the business idea to potential investors, collaborators and partners.
Every business idea begins and ends with a specific target customer in mind. The flow of a good idea assessment process should begin with that customer and proceed from there. In summary, it might flow along the following lines: First, define the customer’s problem and the proposed, and then define the market opportunity and distribution channels to reach them. Identify competitors and partners that already participate in the market, along with their relative strengths and weaknesses. Next, clarify pricing and revenue streams and the costs involved with developing and launching the product. Finally define the metrics or milestones needed to develop and launch the business.
The information provided in each step can be written as short bullet points, with no more than 7 or 8 in each. This helps to keep you focused on only the essential information to assess the idea. The final ‘plan’ should not occupy more than pages. As you develop the business and seek investment funding later on, you will have a good foundation for developing the detailed business plan you might ultimately need. Many advisers and tools are available to assist you through this process. One of my favorites is an online interactive tool that guides you through the entire process. It also allows other team members and collaborators to review and contribute to the work as their time permits. When you’re done, you have a simple one page business model summary that is an excellent communication tool. Check it out at Bizignite.co.