How To Develop and Verify a Business Idea

Before a long time ago, a friend of mine wanted to quit his day job and to start a business with scale models! Yes, scale models! He is a fan, hobbyist, model scale constructor, and had a long time distinctions in the area, developing more than 300 different scaled models and helping other people to build them! Not a so much hi-tech ambition, but a valid one, as well!

My friend had read a very informative article in the newspaper for scale modeling as a business and the potential economic growth this market may have, and he wanted to make a try!

He was all excited about the prospects, he had studied many similar articles, he had, even started to layout the first drawings for his new company! But I said to him, to get back a little bit and think his options for some time, especially BEFORE quit his job and his monthly, family, income!

Everybody has good ideas, but not everybody can make them real! Business is not an easy game and it needs a lot of work, even to persuade someone for the validity of your ideas!

To start a business, you need a lot of tools, help, and support even for starting to design your first moves! That’s why there are too many Seed accelerators and Business incubators to support the process!

One excellent tool in such a venture is the Business Model Canvas that can make your map and identify the basic levels of interests for a company!

The Business Model Canvas is:

a strategic management and lean startup template for developing new or documenting existing business models. It is a visual chart with elements describing a firm’s or product’s value proposition, infrastructure, customers, and finances.It assists firms in aligning their activities by illustrating potential trade-offs.

The model was developed by Alexander Osterwalder (check also his book: Business Model Generation: A Handbook for Visionaries, Game Changers, and Challengers)

The model identifies nine (9) building blocks in which a new entrepreneur should provide solid answers for his business. More specifically, someone who wants to develop and verify a business idea should consider carefully and provide answers to the following areas of major importance for his business:

  1. Key Partners. What are the key partners, your suppliers, your company should rely on, or you should develop in order to you succeed in your market! what these partners, suppliers should do to help your company? …
  2. Key Activities. What are the key activities your value proposition required or what are the activities should be developed and performed, in order your company be viable and successful (i.e. cost reduction, logistics, coding, design, application development, billing, sales, etc.)!
  3. Key resources. What are the basic resources, your value proposition requires in order your company operates without a problem (i.e. physical resources, human resources, financial resources, etc.)
  4. Value propositions. What is the value you like to provide to your prospects? Which problem(s) you proposition solves? How we provide the value? (i.e. innovation, the best choice for a certain problem, design, convenience, portability, cost-effectiveness, etc.)
  5. Customer relationships. What type of relationships, should you develop with your clients? How to keep them? What are the customer sections you address to? etc. (i.e. communities, coaching, mentorship, training, personal assistance, etc.)
  6. Channels. With what channels we should reach our intended clients, how to use them effectively, which one is the best channel? etc.
  7. Customer segments. To whom we address our value, which client segment is more important to you, etc.
  8. Cost Structure. What is the cost associated with your services | products, which resources are more expensive, how we optimize the costs, etc?
  9. Revenue Streams. What is the value, our clients will pay, how to pay, what is their preferred buying mode, etc?

This analysis and the meticulous mapping is the reason of why this model is valuable as a tool for anyone wants to develop an idea to a business!

For more information about how you can implement effectively this business model in startup building area, you can find in the case study of my friend  Martin Luenendonk with the title: Investment Readiness Level Guide: How to Boost Your Startup’s Attractiveness to Venture Capital Investors using the Business Model Canvas. A must read for every entrepreneur!

What would you say! Would you give it a try? Comment on what you think and how you can use it for your business!