Startup Business Concept Refinement

Refine your business concept by researching available information/knowledge to see what works…try to duplicate those things that don’t affect your unique concept…Validate your product/service value proposition by customer testing using the least costly modeling method (minimal viable product) to find product-market fit & gather feedback from potential customers. SIMPLIFY your “vetting” research into: 

  • Business Concept & Target — What customer pain-point do you solve; Business value proposition (VP)
  • Product & Service Offering — Features & benefits focusing on customer benefits
  • Pricing Strategy — Markup; Value; Competitive; Discount; Premium; Niche
  • Business Structure — Legal organization; Established or new; Do yourself vs. Outsource 
  • Competitive Comparison — See if you can spot competition / industry tactics (Benchmarking): Pricing strategy (markup; value; competitive; discount); Product Unique Selling Proposition (USP); Target market/s; Market outreach strategy (online; networking; promotion)

Step 1:Define a Market Need – Business Idea – Feasibility:

  • Need fulfilled or problem solved – (Most founders start with a real problem)
  • Product/service features (components of product/service) and benefits (created by the features) – (Fill a need or solve a problem).
  • Competitive advantage – (Different/better than competition)
  • Business model – (Your fit in the industry; Business Value Proposition (VP); How produce/deliver/market/make $)

Step 2: Evaluate Your Skills/Experience Fit:

  • How do your skills/experience fit your idea.
  • Does your personal risk tolerance fits idea.
  • Can you modify your idea to fit your experience?
  • Do you have the passion to sell your idea to others?

Step 3: Define Your Business Industry:

  • Description: North American Industry Classification System (NAICS); National Trade and Professional Association Directory (NTPA). – (Benchmark industry ratios)
  • Profitability: Risk Management Association Annual Statement Studies (RMA).
    • What kind of profit can you expect to make? (Product/service life cycle)
    • What are average margins in the industry?
    • What current & future trends (demographic, economic, global) are affecting the industry?
  • Growth trends: How fast can a business in this industry expect to grow?

Step 4: Consider Your Target Market:

  • Channel Position: Where in the sales chain will your customers fall? Are you selling to retailers, wholesalers, consumers or other businesses.
  • Number: How big is the potential market?
  • Income level/ability to pay: Are your customers upscale or bargain hunters?
  • Demographics: Location; company size; sex; age; marital status; education level?
  • Psychographics: Attitudes; aspirations; worldview?
  • Lifestyle: Customers urban or rural? How do they spend their work, leisure and personal time?
  • Habits: Where do they shop and how do they buy?

Other Key Factors:

  • Competition
    • How many? How big?
    • Product/service features & benefits
  • Suppliers
    • Kinds needed & availability?
    • How reliable?
  • Business Risk
    • Product/service short-lived fad or long-term potential?
    • Legal/environmental threats? (SWOT)

Key Data Websites To Start Assessing (“Vetting”) A Business Concept:

Key areas to think about when assessing (“vetting”) a business concept include:

  • Industry
  • Customer
  • Competition: How many competitors are there? How big are they? What product or service features and benefits do they offer?
  • Suppliers: What kinds of suppliers will you need? Are sources of supply readily available? How reliable are they?
  • Business Risk: Is the product or service you’re considering a short-lived fad or does it have long-term potential? Are there legal or environmental factors that could threaten your business, such as pending legislation that might restrict your operations?

SOURCES OF INDUSTRY DATA — Suggested places to start researching your industry:

  • The North American Industry Classification System (NAICS) is the standard system federal agencies use to classify businesses. Search it online or go to http://www.census.gov/eos/www/naics/ to find your industry description.
  • Trade associations also have valuable industry information. Search for associations online or consult the National Trade and Professional Associations (NTPA) Directory, available at libraries or online at http://www.associationexecs.com.
  • Risk Management Association (RMA) Annual Statement Studies, available at libraries or online at http://www.rmahq.org, provide benchmark financial ratios for businesses in over 370 industries.

SOURCES OF CUSTOMER DATA — Suggested places to start researching your customer:

SOURCES OF COMPETITOR DATA — Suggested places to start researching your competition:

For more help refining your business concept, view the free video entitled Roadmap For Starting Your Business.

Copyright ©John Trenary 2010-2021

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