So you’ve come up with a great idea and you think, “hey, maybe I could start my own company.” Now, there are many, many things you’ll have to consider before you get too far ahead of yourself. If you think you have the latest gizmo product that is going to revolutionize life itself, here are four things you’ll need to get down on paper before you schedule that meeting with your boyfriend’s buddy’s golfing partner who knows a guy who knows a venture capitalist.
Who’s the customer? Basically, you need to understand who you are serving. What value are you bringing to their lives, what problem are you solving and who does that really impact? Obviously, your customer(s) can be defined in any number of ways – age, sex, interest, location – the better you define who your customer is and how you are serving their need, the more specific you can be about exactly what your product needs to address (and, perhaps, doesn’t need to address).
What’s your value proposition? In other words, what are you offering that no one else is offering? If you’ve defined your customer in step one, then you should be able to define what value you are going to offer that makes your product/service unique. Are you doing what other products do, only you can do it at half the price because of some new technology you’ve harnessed or repurposed? Are you able to provide the same service as the next guy – but able to get it done in half the time? Or are you simply able to offer something no one else has thought of offering? Whatever the case may be, you need to define your value proposition.
How are you going to deliver the goods? Once you’ve defined your position in the market and who you are creating value for, you then need to define how you are going to go to market. What is your business model going to look like? This is a lot more complicated than just saying “I’m going to work out of my house for the first year, then get an office space”. That’s not a plan, that’s wishful thinking.
This step is more difficult than the first two because now you have to balance real-world scenarios (like, how much are these widgets really going to cost and how long can I live on ramen noodles?). There will be trade-offs in trying to piece together the right combination of features and your supply chain and employee needs, etc. It’s more than just “how much money are we going to make”. It’s sitting down and putting pencil to paper and coming up with a realistic definition of how you are going to deliver your goods to the market.
What is your competitive edge? Why will you be unique? And what makes you think your competitors won’t just copy you? Because if your new gizmo can be copied, it will be – driving down profits for everyone in that sector.
The good news is that there are many ways to gain a competitive advantage. Being first to market with a new product is just one of them. You might find that you have a resource advantage – maybe you’re the only one with the recipe, the secret sauce, that unique blend of your local honey and lavender that creates that perfect Lavender Honey Ice Cream. Or maybe you have position-based advantages – unique and gifted people who create and represent your product/service. Maybe finding and training the right people to create the newest, hippist hair salon becomes your unique advantage. Whatever it is – define it.
Once you’ve nailed these first four steps and committed them to paper – you’ll be ready to move on and expand your thinking and planning processes. You’ll have much better direction and a better feel for how to budget your time and expenditures.