When it comes to planning for startup success, traditional methods often fall short. Unlike established businesses that can rely on historical data and baselines to measure progress, startups typically lack this luxury. They lack the industry background knowledge, experience, and business history to utilize traditional planning tools effectively, such as the Business Model Canvas (BMC) or SWOT analysis.
These tools have their limitations and may not provide startups with the insights and guidance they need. Instead, startups need a planning process that is adaptable, responsive, and tailored to their unique circumstances. This is where the vetting process comes into play, providing a dynamic approach to planning that focuses on iteration, customer-centric thinking, and flexibility.
The vetting process is the crucial step in startup planning, and it begins with critically thinking through and defining the business model concept. Startups often operate in highly competitive and rapidly evolving industries, where innovation and differentiation are key to success.
Therefore, it is essential to refine the business model through a series of iterations that are focused on the customer. By continuously seeking feedback and making improvements, startups can ensure that their concept offering addresses a customer “pain-point” effectively.
The primary objective of vetting is to answer two key questions which guide the process:
- Does the concept offering solve the customer’s “pain-point”?
- Is there a strong market for the offering with a critical customer mass?
These questions serve as the litmus test for the viability of the business model. If the answer is “NO” to either one of these questions, it indicates the need to go back to the vetting process’s start and refine the concept further. However, when both questions can be answered with a resounding “YES,” it is time to move forward and develop specific and measurable SMART goals for marketing and operations.
The vetting process enables startup entrepreneurs to gain a clear understanding of where they are in the planning process. It embraces the “fail quick” philosophy, encouraging iteration and adaptation of the idea concept. By constantly redefining and refining their business models, startups position themselves as organizations searching for a scalable and sustainable business model. This consumer-centric critical thinking fosters an environment where startups can fine-tune their offerings and better align them with customer needs.
To grasp the essence of the business model, one must consider three interrelated aspects: product/service, customer, and value. Vetting a business model concept requires an iterative thought process that uncovers the product or service to be offered, identifies the target customer, and determines the value the customer places on it. These three elements are intrinsically linked, making it nearly impossible to figure out all of them without revising and refining the others repeatedly. A successful business model aligns all three components seamlessly while also considering the interests and abilities of the startup.
Reaching the “GO” point for a startup’s business model concept occurs when the product or service aligns perfectly (or nearly perfectly) with the identified customer segment, and those customers place the highest value on the offering. This means that the startup has designed and developed a product or service that precisely matches what the customer values and desires. Customer value should not be measured by a monetary amount but rather by the outcome or aspiration experienced by using the product.
Customers purchase products with the expectation of a particular outcome, and their willingness to pay is based on that experience. Understanding the customer’s desired outcome and where it falls on Maslow’s hierarchy of needs helps gauge the value of the product or service. By customizing the business model to cater to the target customers and their desired outcomes, startups can establish a strong foundation for success.
It is crucial for startup entrepreneurs to prioritize the vetting process before recording their SMART decisions in a written business plan format. The emphasis on flexible planning and real-time responsiveness plays a vital role in achieving success. As General George Patton famously stated, “No battle plan survives the first contact with the enemy.”
This sentiment holds true for entrepreneurial ideas as well – once customers are involved, the product or service is bound to change. Acknowledging this reality, AOL co-founder Steve Case reminds us that “No product or service stays the same once you get customers.” Dwight D. Eisenhower encapsulated the essence of planning when he said, “Plans are useless, but planning is indispensable.”
Startups face unique challenges in their planning process due to the lack of baselines and historical data. Embracing the vetting process allows startups to adopt a dynamic and iterative approach that focuses on customer-centric thinking, constant refinement, and adaptability.
By emphasizing the importance of the vetting process over a rigidly written plan, startups can navigate the uncertainties of their industries and increase their chances of long-term success. Remember, planning is not about having a perfect plan from the start, but rather about continuously evaluating, adjusting, and aligning the business model to meet customer needs and expectations.
If you are planning to start a business or are thinking about scaling an existing one, be sure to read the ebook “Customer Centric Business Planning: A Guide to Optimizing Your Business for Maximum Success”. It is an essential book for business owners, managers, and entrepreneurs looking to leverage real-time insight to start and improve their business operations. Learn how proper customer centric business planning can assess risk and opportunity, and create an actionable roadmap for success.
Copyright ©John Trenary 2023. All rights reserved.