Something may be clear in your head, but what happens thereafter? The journey from your head to the wider world is a strange one. You need to have a vision of what your business could be, work out what you want to do and find a way of explaining it clearly. Imagine you are going public and consider how you intend to let everyone else know. A business idea is addressed to an investor and, therefore, must be formulated with the investor’s perspective in mind. It’s neither an advertising brochure for an “ingenious” product nor a technical description. Rather, it is a decision support document that emphasizes three aspects:
Customer benefit – What is the customer benefit, what problem will be solved? The key to marketing success is not superb products – it’s satisfied customers. Customers buy to satisfy a need, or to solve a problem, e.g., food and drink, something that makes work easier, to enhance their wellbeing or self-esteem, etc. The first principle of a successful business idea is, therefore, that it clearly describes the need that will be satisfied and in which form (product, service). In this context, marketing practitioners refer to a “Unique Selling Proposition”.
Market – What is the market? A business idea only has commercial value when the “market” accepts it. The second principle of a successful business idea, therefore, is that it shows how large the market is for the product or service offered, for which target group(s) it is meant and how it differentiates itself from the competition.
Revenue mechanism – How is the money to be earned? A business must be profitable long term. The third principle of a successful business idea is, therefore, that it shows how much money can be earned with it and how the money will be earned.
- What exactly is innovative about your business idea?
- How unique is the business idea? Can it be protected by patent?
- Who is the customer?
- Why should the customer buy the product? What need does it meet?
- Why is the product better than comparable alternatives?
- What are the competitive advantages of the new product, and why can a competitor not simply copy them?
- How does the product reach the customer?
- Can you make money out of the product? What are the costs involved, and what price can be asked?
Clear structure, using subtitles and indents – 2–6 pages with focus on 3 main topics:
– Customer benefit
– Market & Competition
– Revenue mechanism