Crafting your business in paper before turning it into reality

As a business consultant, I often come across business owners or entrepreneurs who had a business idea and jumped into turning that idea into a startup. I admire people who take the plunge with their ideas. But unfortunately, nine out of ten people would hesitate and walk away from their dream business. Their minds would throw in dozens of excuses why they should not do it. 

Later in life, some of these abandoned ideas tend to nudge us with regret. The regret is even more painful when someone else takes on a similar vision and succeeds with it.

Then there is the race for business survival and success. Statistically, only 14% of startups live beyond their 10th anniversary. The rest drop out of the race. 

Their first mistake is turning a business idea into a business without adequately defining their business model. They never took the time to scope out their business correctly. 

When I was younger, business ideas were documented in what was called a ‘business plan.’ The problem with business plans is two things. One, they are lengthy documents. It takes time to complete a proper business plan. The second problem is related to the first one. Since they are huge documents, they are never reviewed again when the business begins. Another possible reason is that most of the assumptions in the business plan are no longer valid. There is a difference between a plan and reality.

Simplicity is why the lean business model became popular. A lean business model template is only a page long. Completing it will result in one or two pages. 

The lean business model has nine sections to think about. Even if they are few, it’s still a challenge to come up with answers. Simply breezing through the questions without adequately thinking about them will only jeopardize your view of your business later. It also affects the way you will operate and market your business.

I finally wrote an educational article because I often share the benefits of the lean business model with others. I even send them a copy of the template. With this article, my friends have the template and instructions on how to complete it.

The image above is the lean business model template. You can get the word version by clicking here.:

Steps in completing the lean business model:

Customer segment. Define who your target market is. The target market cannot be everyone. It does not make sense to target everyone. You need to identify a target market that will benefit most from your product or service. A simple way to approach this is by identifying the industry and job title of the decision-maker you want to sell to. You then create a more detailed description of the decision-maker by creating a customer avatar. A customer avatar represents the decision-maker that you want to reach. For instance, you plan on going after Marketing Managers. Your customer avatar could be; The Chief Marketing Officer or CMO of a large multi-national FMCG. He is 47 years old and plays golf on the weekends. Joel is married to a beautiful housewife that graduated as an accountant. She chose to be a housewife to raise their children. They have a 25-year-old son and a 22-year-old daughter. They all live together in a luxury condominium in BGC.

Problem Statement. The best companies in the world are solving a problem. A car company solves the problem of transportation. A food company solves the problem of nutrition. A drill manufacturing company solves the problem of hanging memorable photos. You are not selling a project or service. What is the problem you are specifically solving?
Solution. What is your answer to your customer’s problem? What are the benefits of your solution? The features of your solutions will only be secondary to the benefits you bring to your customers. Your customer’s primary focus is the benefits.

Unique Value Proposition. Why should your customer come to you and not to your competitors? Here is where your entrepreneurs’ bias comes in. Entrepreneurs often state their value proposition in this section. We are not talking about just the value proposition. The keyword for this section is ‘unique’ or ‘different.’ What is unique about your product or service? If there is nothing special about it, then it’s a commodity. You will be faced with a pricing war. Can you be the lowest-priced product or service in your category and still make money? UVP is often one of the most challenging sections to answer honestly. Not having a unique answer to this question will make it very difficult to succeed in the business world.

Unfair advantage. What is it that you have that other companies do not have? When you succeed, other companies will start coming out with competing products or services. If you cannot keep your customers or attract new ones because of something others cannot copy, you will start losing customers. 

Key metrics. You need to set a few vital measures of success to know how you are progressing. You cannot improve what you don’t measure. Identify 3-5 things you need to measure to serve as your dashboard.

Channels. It is useless to be marketing on Facebook if your customers are on LinkedIn. It is futile to post content on LinkedIn when your market (see customer segment in item #1) is in TikTok. What channel will you use to promote your brand, product, and services? What blogs do they read? What groups do they belong to? What magazines do they subscribe to?

Cost structure. How much funding will you need to start your business and sustain it? What is your capital and operations expense for the next 24-36 months? You cannot make money if nobody knows you exist. Getting your product or service known by your target market takes time. In the meantime, do you have enough funds to cover this period where you are not making money or profitable?

Revenue streams. How will you make money? Will you make money from your net profit? Will you make additional revenue from an added insurance that you can offer? Do you have a second service you can up-sell or cross-sell?

If you have a new business or are about to start a business, I strongly encourage you to have a clear definition of your business. Then, taking the time to put it together provides you with a clear picture of your business. 

A clearly defined business model is also the input to a second equally important task – creating a marketing strategy. Your customer segment, UVP, etc., feeds into creating a marketing strategy and a marketing plan.

However, that’s for another article.

Please use the template provided, and feel free to reach out for any questions you may have. I am again wishing you the best with your business or startup.

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