Platt Perspective on Business and Technology

Planning for and building the right business model 101 – 1: pre-planning for day 1 and beyond 1

Posted in startups, strategy and planning by Timothy Platt on September 30, 2014

I have written recurringly about startups and early stage businesses throughout this blog, and I look to my experiences working with them as having been significantly important to my own career and work life. I cite in ongoing acknowledgement of that, the progression of postings and series that I have been adding to my Startups and Early Stage Businesses directory here, as well as related material that I have been adding into multiple other blog directories (as listed along the right in my blog template.)

The single most systematic line of discussion that I have offered in that for setting up a new startup from a strong foundation and from the beginning through financial break-even and positive cash flow, can be found in the above cited Startups directory with my series:

• Online Store, Online Market Space (see postings 20 and loosely following for its Parts 1-32).

And my most systematic discussion that I have offered in this blog that focuses specifically on moving beyond startup and early stage and into mid-level and larger business organizational territory can be found in this same directory in the series:

• Moving Past Early Stage and the Challenge of Scalability (see the same directory page, postings 96 and following for its Parts 1-35.)

My goal for this series is to go back to the fundamentals, and planning for and developing the right business model, and both for initial small business needs and for scalability and capacity to evolve from there. And I begin its discussion when a new business startup might still be just a loosely organized and partly conceived founder’s dream, and with a set of basic questions that are all likely to at least begin to emerge during this initial pre-building stage:

1. What type of business do you seek to build? This involves more than just what industry you would work in or what overall scale you would seek to ultimately reach in it. This is about goals and aspirations and what this new business would mean to you.
2. What do you want to offer, and to what markets as products or services and to what type of customer base?
3. How would you define value in what you would offer, to potential customers? This question raises an obvious point but it is one that is not always fully thought through and particularly where offering unique sources of marketable value might be concerned. Value and unique value are in the eye of the beholder, and that means asking this question from a prospective customer’s perspective.
4. How would you define value here to prospective employees when and as you begin to expand and scale up? I am thinking ahead here, but most new businesses are built with longer-term intent, and with an intent that at least in principle would call for at least some growth. This considerations raised in this question, I add, enter into and significantly help to shape any corporate culture and any shared vision of this business that is to come. If you can build for a sense of shared value within and across your eventual workforce that can lead to business cohesion and a sense of shared purpose and long-term sustaining strength.
5. And how would you define value here for yourself? This goes way beyond the questions and issues of what you would bring to market or of what type of business you would build, even if much of your dream here revolves around building some very specific type of business as considered above in question 1. What would make the effort and costs and frustrations and risks, that enter into any startup venture and its learning curve challenges worthwhile to you? And with this, I cycle back to question 1 again.

I write here of an iterative process of thinking and planning, where every step should lead to more doable and practical answers that you can convincingly share with others and both as you start building a founding team and beyond. And if I were cite one point in this posting that is preeminently the most important of all that I could raise here it is that:

• It is vitally important that you ask these and related questions objectively, and even with a brutal honesty if realistic answers would cut against your fonder hopes.

To take that completely out of the abstract, and I add highlight why I am writing this series, I write it thinking back to some of the dot-com bubble startups that I worked with and sought to advise in the late 1990’s. Their founders did not see need for systematic business models or planning; they just knew that they would all become multimillionaires because they were leveraging new online technologies in building their new ventures and they know that would cover any gaps faced.

• I write this in a business and technology blog; technology alone and even great technology alone cannot be sufficient for building a great or even just a moderately successful business. Careful business planning and execution are needed too. And this calls for honesty and with yourself and towards any others who you would bring into your venture.

I am specifically thinking of business startups here that saw technology as the enabler that could resolve all challenges – even when profit margins at best would be so lean and when standard bricks and mortar alternatives already in place were so widely accepted and used that the books could never be made to balance favorably for any conceivable online alternative – and even for more tech-savvy and comfortable consumers. One early online pet food distributor comes immediately to mind for me here. It would have been impossible for them to competitively sell what amounted to a primarily standard mass market product line online with the costs of shipping added in, against standard supermarkets that their proposed customers had to go to anyway for their other shopping.

So start by thinking through precisely what you seek to do in a new business venture, and from a clearly stated and through analysis of who your competition would be and how you would effectively compete for market share with it. And this brings me to my sixth and final addition to my list of questions as started above:

6. Who are your competitors in this and how would you meet their challenge by offering new sources of value that they cannot readily match and at competitive prices?

I am going to continue this discussion in a next series where I will focus on what you would build towards and what you would build away from, and planning and building from positive and negative lessons learned. Meanwhile, you can find this and related postings and series at Business Strategy and Operations – 3 and also at Page 1 and Page 2 of that directory. And you can find this and related material at my Startups and Early Stage Businesses directory too.

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