Business Model and Plan: Which Comes First?

I appreciate reading all the excellent posts about business. The internet covers so many topics which are very informative. Sometimes, though, trying to sift through the urgent to find the important can be like slowly sinking into the informational abyss.

I remember in school once I was told that I should have known about a particular piece of information and consequently had missed a deadline. I replied that I had no idea when the deadline was or even that I was suppose to "opt in" to the event.  "It's right there in our website, you should have known." She then proceeded to navigate through six links to find it in the dark recesses of college web pages. I remember thinking, "If I could only be an expert in everything that I was suppose to apparently know, I would have your job!" Seriously, we can all be overwhelmed by the plethora of data pushed on us or provided for our benefit.

We are both blessed and cursed in this informational age: blessed because of the ease and quantity of information available and cursed for the same reason. Two of the goals I desired to follow when I started this blog were to make the information easy to use and digest and keep it as concise as possible. In this post, I want to provide a flowchart of the typical steps necessary to develop your business. Keeping in mind that businesses are very different and in various states of development, so starting from the beginning of the flowchart may not be applicable to you. Still, the elements below are important to the healthy and profitable functioning of a business. In coming days, I will be discussing each of these fully with helpful tips so you can develop your total business. 

Business Development - click for large picture

Here are a couple sources that provide some good thoughts on developing your business.

SBA.gov: Starting a Business

5 Steps to Starting a Business - Practical Considerations

I hope to do a little leg work for you to provide good, short and intellectually challenging links to help your business grow: 360 degree success.

Before the Business Plan: Plan the Business

Whether you are going on a short trip or a whirlwind tour, having an idea of where you are headed and how you will get to your destination seems like a pretty good idea. This is equally true for people aspiring to start their own businesses. For many business people, the development of  a business plan provides a road map to get to your destination, but they can be a little daunting to consider or develop. There are a lot of resources available, but where do you start?

  

SBA.gov is a great start for getting a little background and beginning to form your ideas. The SBA website shares loads of information for potential, developing, and established businesses. But before we go there, we need to step back a little. . .

Before the Business Plan, Plan the Business

Every year thousands of businesses fail for a variety of reasons. According to the SBA, lack of experience, insufficient capital, and the lack of operational skills and practices are among the major reasons. EricWagner, self ascribed serial entrepreneur, says that an entrepreneur may see an opportunity  in the market or have a wonderful idea that they are sure people will love, but did they bother to stop and ask the market? As you know, great ideas come and go. Have you ever heard of the flying tank or the portable record player?

Fantastic Failures

 My personal favorite is the Vacuum Beauty Helmet.

  

I suppose that was designed to vacuum out the inner beauty?

Most people never had heard of any of these. These are examples of great ideas that did not quite capture the attention of the masses. Everyday businesses invest money into research and development in the search of the new, better, faster, more convenient, and most desirable products for the market. Some products are selected and developed and some go by the way of the vacuum helmet.

This is not meant to discourage you, but being a successful business person requires first doing a little honest brainstorming.  Ask yourself some important questions before you put a lot of time and effort into a product. . .

What is the need that I am attempting to fill?

If customers do not have a need for your product you will not have sales. Need can be generated or motivated, of course. That is what marketing is all about. (Remember the Pet Rock and the Rubik's cube?) In marketing we attempt to teach a customer about a product that will fulfill some need or compel them by emotional responses (more on that later). However, if the product is simply not good or is not easily marketable, it may not be worth your effort.

If I discover a need, have a good fit for the need, and people like the product, why will they buy my product?

There are a lot of products out there. What makes yours unique? How will you differentiate it, your brand or your method to encourage people to choose you? Will you be just one of the masses of products or will yours be the one that people look for?

On the website PowerHomeBiz.com, the author mentions some keys to successful differentiation (which is synonymous often with keys to sales). Knowing your potential customers and their needs is the start of product design and development. 

Once you are as big as Apple^® or Microsoft^® you can be the one to tell people what they want, but plan for a much larger R&D and marketing budget to do it.

The lesson: If you think you have a great product, you should be excited, but make sure you know and understand your potential customers. Make sure you are not the only one who will be excited about your product.