The Business Plan is Dead, Long Live the Business Model
A well designed business model is a critical element of the Lean Model Framework. Instead of writing perfect business plan, you develop, integrate and evolve a solid business model. Here is the summary of questions you should know or be able to know or able to answer regarding your business model. They are listed by various elements of the business model and are not intended to be a definitive list, just thought starters.
Many Entrepreneurs I meet simply do not take the time to really think through and consider the inner workings of a start up opportunity from a business model perspective. This is a critical part of the Lean Model Framework, however, I will cover the business model and its major components in more detail in the next blog post, but here is a summary of the key elements for you to consider as you shape and iterate a business model for your own start up.
Key Target Customer Segments
In addition to understanding that the world has changed forever and that the speed to market is critical, its important to embrace all the elements of the Lean Model Framework (lean resources, business model, rapid prototyping, and customer truth) so as to take advantage of an opportunity and to move fast and perhaps build an amazing company.
IF YOU CANT SELL YOUR BUSINESS IS DOOMED TO FAIL
Im sure you all would think this is a helluva statement to make, but its true. When I started my own business almost 30 years ago I would never have survived if I could not sell my own products.
You need to be comfortable with the job of selling, in fact your sales skills is what is going to drive your business forward. Most entrepreneurs think they can just launch their company and the sales will just magically appear. THAT WONT HAPPEN!
So if you believe you will never be good at selling your company's products or services, then find a partner or co-founder who thrives on selling. To get an understanding of the selling process, the 3 customer types, why people buy (want VS need), and how if done right, they will actually buy from you as opposed to you constantly thinking you need to sell them something. And you cant really sell something unless you have the answers to some important questions related to your business model.
THE KEY COMPONENTS OF A BUSINESS MODEL
If you are an entrepreneur or aspire to be one, here are the key elements of a business model canvas. Remember as you investigate and gather feedback on each element of your business model, you will be making changes to that business model canvas. Get used to making changes - you will make a lot of them as your business model gets refined. But lets go into each element in detail and consider some starter questions. To review, here are the key elements of the business model.
Unique Value Proposition
Customer Relationship feeling
Customer Target Segments
Distribution Channel strategies
Start up activities
Start up resources
Partners, strategic & tactical
Product or service costs
Now lets consider each of these in turn.
Here are some of the questions to develop your business model.
UNIQUE VALUE PROPOSITION
What value will my product or service deliver to the customer?
Which customer problem am I solving?
Am I satisfying a customer need?
What is the minimum viable product?
Is my product offering unique and defensible?
CUSTOMER RELATIONSHIP FEELING
What kind of relationship do I want with my customers?
What do I want them to say or feel about my product or service?
How costly is it to build a relationship?
Can I create the relationship I want in my business model?
CUSTOMER TARGET SEGMENTS
What is the size of the marketplace?
Is the marketplace growing or changing?
Who is my initial target segment?
Who is my secondary target segment?
What are the unique characteristics of each segment?
Do I have to communicate or reach those segments?
NEXT I WILL DISCUSS DISTRIBUTION CHANNEL STRATEGIES, START UP ACTIVITIES & MORE