Got vision? That isn’t enough if you’re a start-up business owner. So says serial entrepreneurs-turned-educators Steve Blank and Bob Dorf in their recently published book, The Startup Owner’s Manual.
It used to be that start-ups began with the ‘entrepreneur’s vision’, which was usually a highly product-centric idea for a company. Only much later – and after much agonizing – would the founder discover the idea didn’t amount to a complete business model.
According to Blank and Dorf, you can only validate your vision by getting buy-in from your potential customers. Completely logical right? In fact, what the entrepreneur should do is then apply that customer feedback to the business model in an iterative process as the business model is developed and “pivot over time based on that feedback.”
Blank and Dorf’s 9 Elements:
1. Value Proposition
What does your company have to offer that the competition can’t measure up to? Is it unique, or simply just better? What is your MVP—the minimum viable product that you can get out in order to elicit customer feedback as early as possible.
2. Customer Segments
Who is your customer? That is, what are their demographic, psychographic and geographic feature?. What problem does your product or service solve for these people?
By what means will you distribute and sell your product?
4. Customer Relationships
How do you plan to forge bonds with customers and use these bonds to create demand for your product?
5. Cost Structure
Which necessary businesses expenses are fixed? Which ones are variable?
6. Key Activities
Which tasks are necessary for the success of your business?
7. Key Resources
What commodities are essential to maintain the health of your business?
8. Key Partners
What other companies or individuals have a stake in your company’s success?
9. Revenue Streams
From where does your revenue and profit come from? How big or small are these sources?
The authors recommend you start with a summary description for each of these elements, which become your hypotheses. These hypotheses are then tested with customers and your summaries become one or two page briefs, adjusted over time as you get additional feedback.
If you’re looking for start-up guidance, consider contacting our financial services and accounting team or leaving a comment or question in the comments section below.