|
|
|
Venture 2010 - The business idea |
 |
|
|
Competition concept >>
Business idea
Business plan >>
What is a business idea?
A successful company always starts with a compelling
business idea. It’s the first milestone in the process of founding
a growth company. The characteristics of a promising business idea
are:
- Fulfills a customer need – a problem is solved
- Innovative
- Unique
- Clear focus
- Profitable in the long term
Each idea, no matter how brilliant, initially has no commercial value.
A plausibility check gives more information about an idea’s
chances in the marketplace and helps to check its feasibility and
innovative content.
What is innovative?
The term innovative is usually applied to new products
or services produced with conventional production methods and delivered
to customers via conventional distribution channels. (Example: the
surfboard manufacturer Mistral uses existing sports shops for distribution).
Innovation, however, can also refer to the entire business system.
It is less obvious, but equally important. (Example: Fedex revolutionized
letter post through central sorting and 24-hour operation).
The development of new products and/or services usually focuses
on improving “customer benefit”. Business system innovations,
on the other hand, focus on lowering costs, and these gains can
then, to some extent, be passed on to the customer in the form of
lower prices.
It’s rare that innovations combine both dimensions,
i.e., product and business system, to create an entirely new "industry."
What defines a convincing business idea?
A business idea is addressed to an investor
and, therefore, must be formulated with the investor’s perspective
in mind. It’s neither an advertising brochure for an “ingenious”
product nor a technical description. Rather, it is a decision support
document that emphasizes three aspects:
Customer benefit - What is the customer benefit, what
problem will be solved?
The key to marketing success is not superb products – it’s
satisfied customers. Customers buy to satisfy a need, or to solve
a problem, e.g., food and drink, something that makes work easier,
to enhance their wellbeing or self-esteem, etc. The first principle
of a successful business idea is, therefore, that it clearly describes
the need that will be satisfied and in which form (product, service).
In this context, marketing practitioners refer to a "Unique
Selling Proposition".
Market - What is the market?
A business idea only has commercial value when the “market”
accepts it. The second principle of a successful business idea,
therefore, is that it shows how large the market is for the product
or service offered, for which target group(s) it is meant and how
it differentiates itself from the competition.
Revenue mechanism - How is the money to be earned?
A business must be profitable long term. The third principle of
a successful business idea is, therefore, that it shows how much
money can be earned with it and how the money will be earned.
A checklist regarding the content and form of a business idea and
further practical tools is available here.
|
|
