Chapter 5 Developing and Testing the Business Concept

Chapter 5

Developing and Testing the

Business Concept

Copyright © Houghton Mifflin Company 5-2

Overview

• Idea to opportunity to business concept

• The relevance of personal goals

• Development of the business concept

• Overview of testing the concept through feasibility

• Why you should start a business today


OpportunityOpportunity

IdeaIdea

Business Concept

Business Concept


ENTREPRENEUR

Distribution

Product/Service CustomerBenefit or

Value Proposition

Entrepreneurial Concept Model


Business Concept

• What is the product or service being offered?

• Who is the customer?

• What is the benefit?

• How do you get the product or service to the customer?


Why Do Concepts Fail?

• Not understanding the customer

• No compelling story


What’s the Compelling Story?

• Why you?

• Why now?

• How do you plan to change the world? AKA: How do you heal the pain?


How Do We Avoid Concept Failure?

• We test it


Feasibility Analysis:What Does the Market Say?


INDUSTRY ASSESSMENTINDUSTRY ASSESSMENT

Market/Customer Market/Customer AssessmentAssessment

Product/Service Product/Service AssessmentAssessment

Team Team AssessmentAssessment

FinancialFinancialAssessmentAssessment

Industry Test

• Patterns of change

• Demographics

• Major players

• Status of technology


Industry AssessmentIndustry Assessment

MARKET/CUSTOMER ASSESSMENT




Market/Customer Assessment

• Target market demographics

• Customer grid• Competitor analysis

and grid• Competitive

advantage• Demand• Customer profile


Customer Benefit Distribution

Babyboomers

Convenience and economy: canfind compilations of their favoritesongs without have to buy entirealbums of one artist

Retail outlet

Recordstores

Provides unique compilations ofhard-to-find great hits of the pastto satisfy the baby boomersegment of their market

Wholesale torecord store

The busyprofessional

Convenience of shopping anytime of the day or night having allthe information at their fingertips

Internet storefor onlinepurchasing

Customer Grid

Initial Customer Grid for Rhino Records




PRODUCT/SERVICE ASSESSMENT

Team AssessmentTeam Assessment


Product/Service Test

• Benefits and features

• Current status

• Intellectual property acquisition

• Plan for prototyping and testing

• Tasks and timeline to completion





Team Assessment


Team Assessment

• Current expertise, skill sets, and experience

• Gap analysis

• Strategic partners





Team AssessmentTeam Assessment

FINANCIAL ASSESSMENT

Financial Assessment

• Forecasting

• Financial premises

• Sensitivity analysis

• Cash needs assessment

• Price/margin schedule







The New Venture

Timeline to Start-up

• Is it feasible?– Conditions to

go forward

• Timeline of activities from today to launch


Take-Aways

• List what your students took away from the discussion here in real time

Documents

Chapter 5 Developing and Testing the Business Concept