Investible CEO Creel Price explains why designing a desirable, well-differentiated product is just the first step in entrepreneurial success.
Many entrepreneurs talk about the importance of building products and solutions that solve a problem (I’m one of them). To succeed in today’s competitive environment, you need to design a desirable, well-differentiated product which addresses a pain point for an identified target market. That’s why many of the best-known frameworks such as the Lean Canvas and Business Model Canvas focus on value proposition.
But unfortunately, that’s not all it takes. A great product alone won’t be enough to guarantee long term success.My goal in developing Investible's Business Model Blueprint is to bring equal focus to the other crucial elements of your business model to ensure you are not just achieving sales, but that you can operationally execute to meet demand profitably over the long term. Businesses that don't hit all of these elements are much more likely to fail.
Here’s what to do once you’ve maximised the value of your product or service:
Fine-tune your delivery
You have a product that people want. That’s a great start but now, you need to work out how you will execute on your business model – your delivery proposition. This area is about how you produce or deliver the product or service you have sold, or will sell. It’s the entire the supply side of your business.
Perfecting your delivery proposition means addressing these five factors:
- Hurdles - The barriers to achieving success.
- Inputs - The core resources required and activities that need to be performed in order to collectively produce, sell, service, deliver and support your business solution.
- Founder Roles - How you divide responsibilities between the people you are partnering with to launch and grow your business.
- Acquisition Strategies - The sales and marketing plan for how you reach your target market and convert them into customers.
- Scale Strategies - The tactics that need to be considered upfront to make your business model truly scalable.
Building an effective and scalable delivery proposition is all about countering the factors that will hold you back and capitalising on the strategies that will propel your business forward. You must also consider the inputs required for the product journey and the acquisition strategy that will facilitate the customer journey. Then, bring it all together by ensuring you have the right founder team with appropriate responsibilities allocated.
Show your business is financially sustainable
There may be a lot of reasons why you wanted to start your business but it’s safe to bet that one of them is to make money. Your financial proposition is best viewed from your investor’s perspective - how you make money combined with how much money you will make.
Just because you are the biggest in the category or you have lots of revenue or lots of staff doesn’t mean you are successful. Focusing on the financial proposition will help you be the right kind of successful. If it doesn’t look viable, you may need to alter your delivery proposition or revert all the way back to the value proposition to change your product offering.
There are five elements that make up the financial proposition:
- Revenue Streams - How you will generate revenue from customers.
- Financial Model - How you make money in a broad sense i.e. not on a month-by-month basis.
- Cost Minimalisation - How you can ensure long term financial viability by maintaining a low-cost base.
- Summary Projections - The monthly and yearly financial projections that form the basis of a budget.
- Funding - How much funding you will require to ensure viability and at least a 3-month buffer for security.
Building a financial proposition is all about ensuring your business is viable. Whilst it is possible to outsource your tax and bookkeeping, you can’t absolve yourself of financial responsibility. If you’re not intimately aware of the intricacies of every figure impacting the success of your business, you are unlikely to reach your ultimate business goals.
Prove your durability
Once you’ve fine-tuned your value, delivery and financial proposition, you need to ensure you can communicate each area effectively. This means creating a business overview. Without a compelling business overview, you won’t appeal to customers, attract and keep the best talent or give investors confidence your mission is worth supporting.
The five elements that make up the business overview are:
- Risks - The areas for potential failure in your business as well as the likelihood and potential impact of those risks and strategies to mitigate them.
- Growth Phases - The natural segmentation of the stages on your entrepreneurial journey from startup to exit, whether by time periods, financial outputs, funding, product offering, customer growth or geographic expansion.
- Success Factors - The factors which need to be focused on to ensure success and the prevention of failure including what stage your business is in and your business model.
- Vision - The ultimate goal that you aim to achieve through your business.
- Mission – How you plan to do business and who you plan to help.
The business overview essentially paints the big picture, describing what you want to achieve and how you will achieve it. Whilst it is the last of the sections you will work on when ideating your business model, it can often be the first element you share when communicating what your business does.