Stop writing your business plan! Just follow these 9 steps to build your successful company!
In these days, it’s obsolete to mention that a business plan often contains too much uncertain information. You only just want to work on your game-changing idea. - Instead, you are sitting in front of a 60-page document, that is supposed to tell you whether your business model is valid or not. Imagine Marc Zuckerberg typing an endless word document in his Harvard dorm room wondering if Facebook is going to be financially viable. The point is this: don’t focus on ideas that are easy to write a consistent business plan for. Find things that people love to use!
Never lose sight of what is important on your journey to your own business: the first and last argument in every discussion should be: does it help us to make people love our product more? If the answer is no – stop what you’re doing, you’re wasting your time on unimportant stuff! Trying out 428 fonts on your first business cards is not going to get your start-up off the ground running.
The following Nine-Step-Guide
helps you to figure out every important part of your idea. You should always keep this simple and extreme efficient structure in mind to never miss your initial north star.
To succeed these steps, download our free Pando Canvas using the download button below
. This guide should capture your business model in a portable 1-page diagram, which is a modified and a bit more detailed version of the well know lean canvas. It should give you the right framework for brainstorming several different business models, prioritizing where to start and filtering out potential red flags or limitations. All right, let’s start…
The 9 most efficient steps to structure your game changing idea!
1. Key Need/Key Problem
Many entrepreneurs are starting just with their idea, which is fine, but haven’t ever thought about necessities of their customers. What problem do you solve with your solution? Which specific need of your customer is central? Try to reduce your product to the (so far) essential unsatisfied need and ask yourself: “am I addressing a key need or problem of a small or even big part of potential customers?
” and get that to the point in one clear sentence.
Think outside the box!
What does your customer really want? For example, people don’t have a primal need for washing machines. Rather, they want clean clothes and care about their reputation. Really understand what the primal need is of those animals we call humans!
“What is the job the customer is hiring you to do?” – Clayton Christensen
2. Value Proposition/Factor 10x
What is the value your business model should transfer to your customer? This is possibly the most important
step within this guide.
Founders relate to their own ideas like parents to their kids: they always think there is something extremely special about their own! Don’t do that! Prevent yourself with the following tactic:
Don’t bother with things that are 10% better than the rest. Instead, only proceed with ideas that are 10 times better
in some measurable aspects. When examining current disruptive business models like AirBnB, they are offering an at least 10x better solution comparing to other online booking platforms, e.g. 90x more listings per employee. It should be mentioned that these factors are just be developed during your actual company building process, but they should already play a major role in initial considerations building a good baseline.
In case of the washing machine from Step 1: if you want to be a category killer for washing machines, don’t build one that uses 10% less water. Instead, find a 10 times easier/cheaper/faster way
for people to clean their clothes!
3. Customer Segments/Early Adopters
This step is about identifying your main customer segment. It’s common that you have several different ones, but the important thing is to determine them as accurate as possible. If you don’t know your target group like your vest pocket, you aren’t able to position your marketing and sales channels in the right way.
In addition to that you should distinguish between customers and early adopters. Early adopters are persons who would buy your product even if it’s not perfect but it satisfies their need for the latest technical innovation. (Your MVP)
Consequently, try to focus on only 3 different customer segments. Number 1 should be your early adopter, Number 2 and 3 are potential buyers for your further advanced MVP.
Pro Tip! Should you have several target customers that are very different from one another, do one Pando Canvas for each customer segment.
4. Existing Alternatives
This step is all about market research
. How are your customers currently satisfying their need or solving their problem? Is there already a player in the market, who offers a similar version of your business model? It is extremely important to know your market and all your competitors.
It should be mentioned that numerous members within our accelerator program are often doing the same mistake: They only focus on competitors in their individual market, but you should investigate every institution which tries to satisfy the need of your customer. Online and even offline.
When you transfer that again to the market of washing machines: If you want to create an online platform for clean clothes you should also think about stationary shops.
This part of the Pando Canvas goes along with the Mindset of Eric Ries’ Book ‘Lean Startup’. The question you should ask yourself is: “How can you achieve real sales while spending only a minimal budget (or even none)? Of course, you can think big, but you should start small. In many cases, it’s even possible to build your MVP without spending money using online tools like Unbounce or Webflow. You can experiment with your product through customer immersion and collect first leads during your product building process. Think also about your access to important contacts. Who can help you to place your product in the market?
Pro Tip! You would be surprised how many online and offline business models can be tested in real life by providing the value proposition in person with pen and paper. If nobody is willing to pay you to do it in person, maybe your idea isn’t good enough.
6. Marketing Channels
After you have defined your solving key need and potential customer segments, you should think about how you can transfer your value proposition (2) or rather your better problem solution to your customer target group. Which is the right channel and what will it cost to acquire one specific customer? Where can you achieve the highest conversion rate transforming a stranger into a customer? We recommend the power of A/B-Testing’s to figure out which brand communication attracts the most customers.
7. Epiphany Moment
Remember when you first created your Facebook account and linked up to all your friends? Remember when swiping right on Tinder, the app showed you “It’s a match!”?
The epiphany moment describes the enlightening realization your customer has when he or she is being understood. Which momentum in your customer journey causes customers to fall in love with your product? You should focus all possible efforts in making this part of your customer journey as special as possible
to guarantee a high live time value (LTV) of each customer.
At this step, simply define every shareholder of your business model and filter out required suppliers and partners to run your product, e.g. parts of your supply chain or other interest groups. Try to order them chronologically by relevance to know who you should contact first. Which partner or supplier can be used as a leveraged asset to get access to needed information or goods. Important: Think always in different dimensions (here: online and offline)
Which parts of your business model can be bottlenecks or limitations during your company building process? What are possible market entry barriers? How many added employees do you need to sell 1.000 or more products? Think also about needed licenses or depending institutions for your customer journey. There are markets with higher and lower market entry barriers. Make a research about your considered market and gather them in this field, which means high extraordinary production costs our needed selling legitimations.
Yeah! You got it!
When you have completed these 9 steps: Congratulations! You have created the best possible setup for the following tasks. You should always keep this structure in mind and refresh it when needed. Your current concept will change a lot in your ongoing execution process. Every time you pivot and find a new angle, update your Pando Canvas!
Have it always pinned above your desk! If you do, you will save time and money, always know how what to focus and what needs to be done to turn your idea into a company!
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