Any good business model includes: (1) a strong market opportunity; (2) a solid management team; and (3) a sound capital structure.
This is the first in a series of posts that will outline each point.
1. Strong Market Opportunity.
This is more than just finding a market opportunity that you want to address. It involves development of a detailed model of what the opportunity is (“IS”), how you can address it better than anyone else (“HOW”), and how you can be profitable in doing so (“PROFIT”).
I see a lot of business plans that address the IS and HOW but ignore PROFIT. To satisfy the IS, HOW and PROFIT, I have organized three proofs for the business owner to satisfy:
1. Proof of Concept
2. Proof of Scale
3. Proof of Commercialization (at profit)
At its heart every company has a concept to prove. This step arises after you identify the problem in the market that you want to solve. It is the first step to prove that you can solve the problem.
In my business, for instance, the proof of concept is simply to prove that I can provide excellent legal council in areas of business law, entrepreneurial law, SaaS law, and funding law that helps clients through their business growth phases.
For companies outside of professional services fields POC can be more difficult. For a web analytics company, for instance, a basic software design and build will put out a POC product that can run and analyze data and provide basic results. The design and build may also include user interface. These steps can costs between $30,000 to $200,000 depending on the complexity of the design and build. It is only after the design and build that you know, at the highest level, that you can solve the problem you identified in the marketplace.
This is the first in a series of posts that will outline each point.
1. Strong Market Opportunity.
This is more than just finding a market opportunity that you want to address. It involves development of a detailed model of what the opportunity is (“IS”), how you can address it better than anyone else (“HOW”), and how you can be profitable in doing so (“PROFIT”).
I see a lot of business plans that address the IS and HOW but ignore PROFIT. To satisfy the IS, HOW and PROFIT, I have organized three proofs for the business owner to satisfy:
1. Proof of Concept
2. Proof of Scale
3. Proof of Commercialization (at profit)
Proof of Concept
At its heart every company has a concept to prove. This step arises after you identify the problem in the market that you want to solve. It is the first step to prove that you can solve the problem.
In my business, for instance, the proof of concept is simply to prove that I can provide excellent legal council in areas of business law, entrepreneurial law, SaaS law, and funding law that helps clients through their business growth phases.
For companies outside of professional services fields POC can be more difficult. For a web analytics company, for instance, a basic software design and build will put out a POC product that can run and analyze data and provide basic results. The design and build may also include user interface. These steps can costs between $30,000 to $200,000 depending on the complexity of the design and build. It is only after the design and build that you know, at the highest level, that you can solve the problem you identified in the marketplace.
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