Congratulations Entrepreneur!
You’re 40 steps away from converting that your new business idea into a profitable venture worth every iota of productivity you attach to it.
OBJECTIVE
These key steps will help you identify what you need to work
on and where you need to improve in your business. As a bonus you might just stumble upon another
business idea in the process, but most certainly this exercise will improve
your business acumen.
REQUIREMENTS
REQUIREMENTS
Get your notepad and pen handy. I suggest you read through
all the steps first, before you attempt to provide answers for each as it
applies to your kind of business.
Knowledge of the Economics of Life, Understanding Economics Dynamics, and The Business Principles is a prerequisite for getting the best out of this phase of proving your business concept so I equally suggest you read those articles first before you proceed here.
Knowledge of the Economics of Life, Understanding Economics Dynamics, and The Business Principles is a prerequisite for getting the best out of this phase of proving your business concept so I equally suggest you read those articles first before you proceed here.
40 STEPS TO PROVE YOUR BUSINESS AND MAKE IT ROCK SOLID
- Clearly define your product(s) or product categories.
(Product/Service - the actual product you're selling to support the evolving economics of humanity)
- State what problem in your environment
your product is solving. (Demand Depth: there has to be a problem and
an actual (not presumed) demand for your specific solution within your
business locality)
- Identify the key benefits your product
is giving to your customers. (User Benefits - a list of the benefits
(not features) your solution provides to your customers)
- Clearly define who and who has the problem
your product is solving. (Target Market - the demography of potential
users who need your solution more than others)
- Draw a detailed flow chart of the
different steps that follow your product from order to delivery.
(Product flow: for manufacturers who produce for open market selling, you
can simply state the procedure from production to retail supply)
- Identify if your product is a
necessity for economic sustenance or simply a want. (Sustainability:
whereas wants change fast with new trends and new discoveries, needs stay
for ages since the beginning of time, so be certain where your product
falls)
- Identify if your product is a
commodity, preference, convenience, unsought, niche, complimentary or
premium. (Demand Segmentation; Commodity is a raw material or
agricultural produce that's basic for human existence; Preference is
simply a variation of existing goods or services that gives a user
alternatives; Convenience is a service offering faster, easier, better
ways to access goods and services; Unsought is an uncomfortable product or
service that is not in high demand yet needed in a society e.g. a coffin;
Niche is a specialized product or service that is in demand within a very
limited circle of users; Complimentary is a product or service that is
usually demanded along aside an existing product or service; Premium is an
extra higher quality product or service users are willing to pay huge sums
for compared to the regular available alternatives)
- Assess how closely and frequently the
benefits of your product are linked long-term to your customer’s
appearance/safety/pocket/emotion/curiosity. (Relationship Depth:
humans tend to be more attached to a supply/source when it comes to
products or services that directly affect other people's positive
perception of them, their protection from perceived threat or danger, what
will ultimately enrich them and make them escape lack, what will make them
derive pleasure or avoid emotional pain, and finally what piques their
curiosity to know more and learn more and be more)
- Assess the efficacy, the speed, the
reliability, ease of use, and multi-utility of your product in comparison
to existing solutions for your customers. (Economic Valuation - the
features of your new or better alternative that will save the user time,
energy, resources, and disappointment)
- State how many prospective customers you have met who identify with the problem you are solving and are willing to buy into your solution.
(Market Validation - an exercise to verify that there are actual people from
your target market who buy into your specific solution because they are
satisfied)
- Identify the alternatives your
customers are currently using apart from your product and other existing
alternatives including their benefits to your customer.
(Competition/Supply Analysis: realize that in most cases the problem you
identified is already being solved one way or the other, so you want to
know who the existing solutions providers are and how they are solving the
problem to know how you can restructure your better solution)
- Clearly identify what makes your
product or can make your product a better solution compared to the
alternatives your customers have. (Competitive Advantage - a
side-by-side assessment of your solution in comparison to the existing one
giving your customer a better reason to choose your solution above others)
- Find out how much your potential customers
will be willing to pay to use your better solution. (Price Sampling:
taking note of the amount of money your customers are willing to part with
in exchange for your product or service will help you structure a fair and
competitive price taking other factors listed below into consideration of
course)
- Identify how frequently your potential customers will need your product per period. (Production frequency - the
average number of times your product will be consumed per user per period
can guide you in price decision making relative to the cost)
- Identify the minimum key staff
required to deliver the first unit of your product. (Staffing - the
team of key workers required to launch your product or service into the
market)
- Calculate the fair minimum wage to pay
for the basic skill set your key staff is required to have to deliver the
product. (Payroll - the fair salary range obtainable within your
industry and locality to pay a staff in exchange for their productivity)
- Calculate the cost of producing a
single unit of your product. (Cost of Production: this should include
the direct cost of the consumables/raw materials required to deliver your
product if any)
- Calculate what it would cost to stay
in operations on a monthly basis. (Overhead - this is the indirect
costs associated with delivery of your product or service such as rent,
the payroll for staff, utility bills, and other reoccurring bills not tied
directly to cost of production)
- Identified the cost to deliver the
first unit of your product to a customer. (Setup Cost - this is the cost
of setting up shop to commence operations and includes the production
equipment, machinery, furniture and fittings, raw materials, overhead
costs, etc.)
- Put a price or pricing structure to
your product based on the demand segment, target market purchasing power,
competition’s pricing, price sampling feedback, cost of production,
overhead, and setup cost. (Pricing: having identified all other costs,
here is where you determine what the price for your product or service
will be)
- How many units do you need to sell to
cover cost of production and overhead? (Break Even - this is the total
amount of sales or the total amount of money to be made periodically that
is equals to the total cost of production and overhead cost within same
period)
- How many units you need to sell to
generate the setup cost after break even? (Profit line - this is the
total amount of sales or the total amount of money to be made in excess of
Break Even which will cover the cost of setting up shop)
- Identify where to easily find or get
your target market to distribute the volume of your product required to
break even and also to cross through the profit line. (Sales Outlet:
these are the channels through which your products will get into the hands
of paying users)
- Identify reliable supply sources for
the raw materials needed for your product including their capacity to
scale up with potential increase in your production due to possible high
demand. (Supplier Management - this involves sourcing and verifying
reliable partnership for the supply of your raw materials and should
include alternative backup sources)
- State the quality assessment structure
you have in place to ensure your product standard doesn’t drop.
(Quality Assessment - is a standard operating procedure written out and
used as a guide to assess the output and maintain a consistency where
applicable)
- Identify the potential challenges that
may interrupt the flow of delivery of your product and the quickest
solutions around these challenges. (Risk Assessment: every production
procedure by man is susceptible to hiccups that may temporarily affect
delivery so knowing potential sources of possible hiccups and making
provisions for the probability ahead of time can save you energy, time,
resources, and maintain your reliability score)
- Would your business operations require
any kind of license or permits and have you gotten them or figured out how
to access them to operate? (Licenses and Permits: for businesses
regulated by certain governing bodies, licenses and permits may require
payment to get and should be added to setup costs. It is also good to be
knowledgeable of the process of accessing these documents including the
possible prerequisites to obtain them)
- Would you rely on vendors in the form of
collaborations with other businesses to produce part of your product or
services and do you have a guiding structure to protect the collaboration
and resulting product? (Collaborations: this is one effective way to leverage
on the expertise and productivity of another company to reduce overhead
and capital equipment cost in your own business. You simply get to stick
to your strengths and core.)
- State the ideal
location for your business operations provided your product delivery needs a place
for production or storage or it requires physical interface with your
clients? (Location Siting: the siting of your operations is relative
to the nature of the product or service you are delivering and should be
carefully chosen with view of being in business long-term)
- List with pictures the technical
specifications and cost of the key equipment type(s) required
for the production and delivery of your product. (Equipment Selection
- the assessment of the tangible and intangible equipment required for
production bearing in mind the lifespan of the equipment, cost of
upgrades, and cost of replacement when necessary)
- How long would it take to set up your business to deliver the first product? (Period-to-Entry; it is good to have
a fair idea of how long it would take to set up shop for production in
other to make reasonable projections and planning)
- Do you have an existing business name or would you need to register a business name or a Limited Liability Company under which you’ll carry out your business activities? (Corporate Structure - this involves making very key decision concerning your relationship with the law of the land and how your activities translate into tax-returns for development of the society)
- Do you have the fund or would you need fund from financiers or investors to set up the business and kick off operations until break even period and have you decided what to give in exchange? (Financing - this is where you determine if you would be needing financial partners to back your business and the nature of the partnership. Your knowledge of Corporate Governance will give you an edge in making these decisions)
- Have you considered the process of hiring
staff if you would do it yourself or require the services of professionals
to handle the hiring and structuring? (Human Resource: finding and
choosing your team is a crucial part of the business success and should be
dealt with professionally for more corporate structures and should be
based on quality output not sentiments and bias)
- Identify the skills you would
personally need to effectively manage the gestation period of the business
including the caliber of staff to oversee and the administration required
and where to get this management training. (Personal Training:
sometimes the type of solution you've imagined may require you to upgrade
your own skills in project and business management in other manage the
affairs of the business especially within the first few years before you
move on to some other venture. Find where to get that knowledge before you
kickoff and make out time in between your schedule to keep upgrading
yourself afterwards)
- Do you have a training/human capital
development schedule for your team members to upgrade their skills set
according to the requirements of their jobs and the commensurate reward
system for their growth? (Staff Remuneration Plan: for businesses that
will grow with the growing demands of their target market, there's need to
continuously improve the mental and physical productivity of staff and
reward the growth process for best results. Also remember your staff are
humans and need to rest as well as explore other aspects of life so you
should factor that in your working plan for your team)
- What accounting and legal framework
(policies, procedures, ethics, and agreements) will you need for the daily operations of the business in terms of record
keeping, analysis, interpretation, etc.? (Office/Brand structuring:
this is where you define the policies that would guide your activities in
the business operations across board. Your business organization is hinged
on these especially where there are more than one staff and your
operations are frequent and repetitive. You'll need a lawyer and an
accountant)
- What is the customer service media
through which your customers can communicate their appreciation,
suggestions, and complaints with your product to help you improve your
services and get more happy customers? (Customer Satisfaction: happy
customers are your best cost-free form of advertising and how you treat
them will always get you referrals. It begins with listening to them so
decide what platform is more flexible and cost effective to get your customers
talking about your product. Welcome criticism and praises.)
- What milestones will serve as
expansion triggers for your business and how do you intend to manage the
expansion phase when it comes, without upsetting the flow of your business
operations? (Growth Plan: this is a crucial part of your idea
development phase and can help you manage your resources to save potential
losses if it is considered ahead of time)
- What's your exit strategy? (Exit Plan - At the end of establishing your business, you may consider sticking to it lifetime and willing it to your next generation or selling it outright to either a private buyer or the public through shares. Having a vague idea of your exit strategy is better than not having an exit strategy at all)
