There are a lot of factors to be taken into consideration before starting a new business. The most important one among them, and the first one the entrepreneur should do, is to create a feasibility test for the project – whether by means of market research & analysis or by performing a tangible examination of the idea.
We will now demonstrate how to do this:
First of all, market research must be performed. This step will allow you to create a solid business plan for your product or service. The aim of the research is to build a preliminary profile of your target audiences to which the product or service is designed for.
Market research and a real MVP need to be derived from conclusions discerned from the aforementioned tests and feedback, and the subsequent business model should cover aspects such as:
- Demographics (gender, age, income level, career, education, etc.)
- Geography (Customer location, geographic markets relevant for product, etc.)
- Positions, values, lifestyle, religion, and so on
- Product-related Behavioral segmentation
- Communication channels
If, for example, an entrepreneur whose product is a luxury jewelry know that their target audience is a wealthy population, it is likely that a prestigious packaging and personal brand will be utilized as good ways to present the “product” to your target audience.
But How Can You Be Sure?
This is the point where the analysis of the competition becomes relevant. Competitors are an excellent source of analyzing best practices, and the good news is that every business, without exception, has direct or indirect competitors.
The competitors’ products/services themselves can be explored, in addition to how are they being marketed to their target audience, how they manage their customer relationships, and if possible – how successful are they (in terms of market share, for example). Competitive analysis is an entire subject unto itself, and a great way to learn it is to try to experience your competitors firsthand as the client/user.
Once there is a good understanding of the necessary course of action, you can begin to work on your product features and the necessary marketing methods needed to create the product/service’s “value proposition”; that is unique and separates it from its competitors.
Now, you can create and fill out the “Business Model Canvas” in the way you envision the initial version of the project. This document should be referred to as the project “Board of the Enterprise” – the more you learn and understand, the project and everything that is related to it, (the Business Model Canvas included) needs to be updated accordingly.
Examining the Business Model (Not Income Model)
The next step is to actually examine the business model. While this procedure has many nuances, the main idea is simple – let customers use the product/service as quickly as possible, while performing tests and receiving feedback in a frequent and continuous manner.
A simple example of the aforementioned methodology for developing an application
- Construction of the application’s initial design and Mock-ups, which will constitute the basic MVP (Minimum Viable Product).
- Presenting the MVP to acquaintances and people who can be trusted and are able to be objective, in order to receive preliminary feedback on the idea and MVP.
- Locating a small and relevant market segment for the application and collect additional feedbacks. This can be done, for example, by creating online surveys (via Google or Survey Monkey).
- Establishing a landing page. The landing page will be used to create interest among users and to create a primary user base by encouraging the registration of a distribution list.
Remember that this is just the beginning. A real business model MVP would require going out into the field in order to perform a pilot and receive more extensive feedback from friends and acquaintances.
The key to success is to always be ready to make changes in the business model, depending on the learning process and reasoning regarding the client’s needs. During the process you may need to go back and make changes, small or large, within the model — from adding/reducing different features in the product/service or even for the purpose of re-setting the target audience. Good luck!