Entrepreneurship receive a lot of attention recently and yet many people believe it cannot be taught. But if you look around, the greatest entrepreneurs – Richard Branson, Bill Gates, and all the others – had just one thing in common: they really made great products. The invention (the idea, the technology, or any sort of intellectual property) is important, but not always mandatory: Steve Jobs identified other inventions (eg: the computer mouse created by Xerox PARC) and commercialized them through Apple.
1. How do you a create a market that you will dominate?
We all agree that creating an innovative product where no market currently exist is essential to the success of a startup. Compared to a “me-too” position in an existing market, the creators of a new market will have a very high or dominant market share. Of course, you will have to work hard to identify and understand your possible clients and all primary market research and third-party analysis is just guesswork when you are creating something new.
After you identify potential end users and applications for your idea, the next task is to list the top market opportunities by answering some questions:
- Is the target customer well-funded? If your target customer doesn’t have money, the market is not sustainable
- Is the target customer accessible to your sales force? If you want to rapidly sell your product, direct feedback is important.
- Does your target customer have a reason to buy? Would your customer prefer your product or the competition? Or, is your customer happy with your product? Sometimes your worst competition is the customer doing nothing.
- If you win this segment, can you leverage it to enter new ones?
The market creation and segmentation processes identify potential opportunities. The goal of this research is not to find a perfect solution, but to help you start thinking in a wider way.
2. How to build an End User profile vs Persona?
After you identify your specific beachhead market, you should start learning about your target customer. Each customer represents an user and a decision-making unit. Potential characteristics to include in your end user profile: gender, age range, income range, geographic location, fears, motivation, what makes them special and identifiable.
Your analysis of your target customer is on the right path after you define your end user profile. You are just at the beginning of the journey but this is a critical step to describe your customer concrete and very real. Unlike the end user, the Persona is a person who best represents the primary customer for the beachhead market. By choosing an actual end user as your Persona, your Persona becomes concrete. In the process of creating it, all key members of your team should be involved. You typically want to include very specific personal information (born, raised, education, family etc), professional information (job, salary, experience, managers, performance etc).
The process of developing a Persona provides details about the primary customer, not only at the rational level, but emotional and social as well.
3. How do you make money off your product?
Now that you have an idea and a Persona, you can easily start working on your business model and make your first estimate on your pricing framework. You should be aware though that it might change by the end of the planning process.
Basic pricing concepts
- Set your pricing based on the value the customer gets from your product rather than on your costs. Try to determine how much value your customer receives from your product and charge a fraction of that – the exact price depends also on competition, industry etc.
- Understand the prices of the customer’s alternatives. You should research other alternative with similar benefits for customer – data collection and analysis is very important
- Different types of customers will pay different prices depending on how early or late they are compared to others, so you will need a differentiated pricing strategy for distinct customer segments.
- It is always easier to drop the price than to raise it
4. How do you scale your business?
The very first step is to plan scaling your startup begins before you even start it. Business plans might be useful or not, but you need to have a solid idea of where you want your company to be 10 years down the road. Scaling a business is not a struggle when everything connects
You should be aware that scaling involves increasing sales or services while reducing the cost of doing so. In most of the cases, this can be achieved through systems that exponentially add revenue without the need to increase costs in equal proportion.
In conclusion, by answering some basic questions and creating a plan, you can leverage the following strategies and methods to start and then scale your business. It doesn’t sound easy but you know it is well worth it.
Sources of inspiration:
Aulet, B. (2013). Disciplined entrepreneurship: 24 steps to a successful startup. John Wiley & Sons.
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