In order to evaluate your business model assumptions, there are specific questions that you should be asking yourself, potential customers, and other important players in your product area, marketplace, and industry ecosystem.
Let’s start with questions you should ask yourself as part of what we call the personal discovery process.
Personal Discovery Process. There are many questions entrepreneurs should ask themselves as they start the initial assessment of a new venture idea. Some are personal and require introspection. Such questions focus on interests, values, passions, domain knowledge, financial situation, and long-term goals. As an initial screen as to whether a particular venture idea is a good fit for you and your team, you can take a look at important business model elements and the degree of knowledge and access available to support venture development and execution.
The Offer: Problem, Solution, & Value. The first place to start involves the customer problem you are attempting to solve and the potential value created for the customer. While this might sound like an odd place to start your effort, it makes sense if you are focused on creating customer value and not on a specific product or technology.
There are many questions entrepreneurs should ask themselves as they start the initial assessment of the customer problem, solution, and potential value. Starting with the problem, how much do you know about the problem you believe your venture solves? Who experiences the problem? How serious do they perceive it to be? How much value will they achieve from your solution. There is a great deal to know about the problem before you validate that you have the right solution, much of which you will learn later in the discovery process. However, it is important to assess how much you and your team currently know about the problem your venture is attempting to solve.
Customer Experience: Segments, Channels, and Relationships. As you start this personal evaluation of your venture, don’t forget that you have a good deal of experience as a customer yourself. So ask yourself how much experience do you have personally as a customer of alternative solutions? If you have direct experience with the problem and optional solutions, what was your experience with the solution? How did you learn about the solution? Where did you gain access to the solution? And if you have not have direct experience, how many people do you know that have purchased and used the various solutions that are currently out in the marketplace?
This is also a good time for you and team to ask how much you know about current competitors? Researching your competitors is a critical aspect of the venture discovery process. While you will need to do a much deeper analysis on each competitor, for now it is important do a quick scan of the competitive landscape. Many of our students are totally surprised (and sometimes disappointed) to find a company doing exactly what you are hoping to do. There is no need to consider this a deal breaker, but you should have some early knowledge and evaluate any access you have to competitors.
Infrastructure: Activities, Resources, and Partnerships. During this early personal screen, you want to focus on the skills, capabilities, and resources you and your team bring to the venture. Think about the core tasks and activities that will be required to provide value to your customer. What domain expertise is required? Are there specific technical or marketing skills critical to developing and launching your product? Once identified, then ask whether you or team have the requisite expertise and skills? If not, do you know people that do and can you hire or partner with them?
You should also be asking what resources you do have access to whether it is through financial means or through personal connections or partnerships? If you need to manufacture your product, do you have the funds to pay for initial production runs? Or do you have family connections in manufacturing that can help with early, small production runs? You may need some early support from professionals such as legal or accounting? Do you know such professionals that might advise you early on for lower cost? It is important to examine all your social and professional connections to see if you can accumulate the necessary expertise and skills to support the operation of your business model.
Profit: Revenue and Costs. Finally, as you complete this personal discovery process, you will want to assess whether you have or can readily access information about customer purchasing behavior, competitors’ pricing, and other key information that will support your assumptions about how your business will be profitable in the future.
There are two final questions that you should ask your self before diving into the venture creation process? Is financial gain the primary driver? And do you have the financial resources to sustain yourself while your new venture becomes viable and can provide support for you and your team? If you say yes to the first question, then you might not have the proper motivations for being an entrepreneur. The vast majority of new ventures take a long time to become viable if at all. If financial gain is your main concern, you may become disenchanted early in the process. Having enough resources to maintain a comfortable standard of living is also important. If you have to always be worrying about paying your rent or having enough money for meals, then you should not undertake a new venture at this time. Much like any career transition, you should have at least one to two years worth of living expenses saved before taking a serious plunge into the world of venture creation.
For more information on Venture for All®, go to bit.ly/VENTUREFORALL.