ADVOCATE COLUMN 4TH WEEK JANUARY 2017
Often people start thinking about new ventures and new businesses at this time of the year. Traditional wisdom suggests that all businesses need a business plan. Particularly when someone is looking at starting out, they are asked where and what their plan is. Yet in many cases the question that it might be more appropriate to ask is why they believe they should be in business and whose problems are they solving by starting their venture. If business exists to meet a market need then understanding what the market needs is an essential element of any start-up business. While the traditional model of developing a business plan is a necessary tool for any business and provides a framework on which a venture can be organised, it does not always address the more fundamental issue of demand.
In the case of a start-up there may not be sufficient verifiable information available to accurately assess whether the product or service meets a need and that enough people will pay for it to make it worthwhile to the prospective business owner. Some more innovative commentators such as “lean start-up” proponent Steve Blank suggest that it is necessary to start testing the market as soon as possible and to accept that the product development – whatever the product may be- will be a constantly evolving process pivoting on the response of interaction with as many possible partners, prospective investors and especially potential customers as possible.
This approach has been described as improving a ventures chance of success by failing fast and continuing to learn. Rather than starting with a business plan it starts with a business model developed through experimentation and feedback. It recognises that many business plans do not survive their first contact with customers and that start-up businesses are not necessarily scaled down versions of large successful businesses. The long development cycle of many products is a major constraint to market entry; the lean approach can help overcome the high cost of getting your first customer and the higher cost of getting the finished product wrong.
This approach may not suit everyone but will suit the innovative and the entrepreneurial and is certainly and avenue worth at least investigating. It requires very little time and can add a level of certainty to the start-up process that may not have previously existed. It will also ensure that the potential business person asks themselves why they believe they should be in business and whose problems are they solving by starting their venture.