01 Mar You Need a Business Model First
By Donovan Hardenbrook
You see, business plans are full of untested assumptions. Assumptions about the market, your product, your customer and how your will make money. Starting your business based on untested assumptions will cost you a lot of time and money. Painful lessons that can be avoided.
Now imagine if most the assumptions about your business were validated with research. Rather than looking at your business with rose-colored glasses, you have information that has been tested to be real and accurate. You have confidence that your business will succeed!
Modeling and testing your business is such an important first step in your business. Doing research on your niche market, finding the unique value of your product or service, understanding sales channels, identifying key partners, and understanding how much a customer is willing to pay is critical for developing a successful business plan.
This is why I advise my clients to use the Business Model Canvas whether they have a new or existing business. According to Strategyzer, over 350,000 people have used it. My client and I work through the major sections of the business model canvas, document assumptions and most importantly validate the critical elements of what will make their business successful. The insights my clients gain from this process not only increases the understanding of their business but improves their chances of success.
Click here to get a free pdf of the Business Model Canvas and the first chapter of the book Business Model Generation.
After reviewing this material, I would encourage you to jump in and start working on your business model. Share your assumptions and ideas with your trusted advisors. More importantly, you need to go out and test your assumptions. The goal of any startup is to find a viable business model and once you find it, you can develop a credible business plan.
At the end of the day, it just makes more sense to refine your business on paper versus investing capital in a business fraught with wrong assumptions, having to make big adjustments and experiencing negative cash flow due to unforeseen expenses and lower sales.
What major lessons have you learned about your business?