Is your business idea a good one?
March 17, 2011 at 6:05 p.m.
Updated March 16, 2011 at 10:17 p.m.
You have heard it before. You need a business plan before you start a business.
However, most entrepreneurs can't stand the thought of actually sitting down to write one because it reminds them of the dreaded research papers they had to write in school.
As SBDC advisors, we help clients write their business plan. While going through the steps to write a business plan, I hear these excuses:
I don't have time for that.
What good is that going to do?
The bank is making me write one, otherwise I wouldn't.
Most of the time, clients never finish their full plan and open without one. Not fully thinking through how you will operate your new business is a precursor to a short-lived business.
For all of you procrastinators and naysayers of the need for a business plan, I have good news for you. You truly may not need a business plan.
This, however, does not mean you get to start your business without working through how the components of your business will fit together.
Because most people are visual, it makes sense for future entrepreneurs to make a "roadmap" of how they will operate their business. One tool we've recently found is the Business Model Canvas devised by Alexander Osterwalder and Yves Pigneur.
This is a nine-section map that walks a new entrepreneur through the many components of business operation. I like to call the process "Mapping Out Your Business Idea." It's a fun process that involves essentially one sheet of paper, sticky notes and your ideas. (Much more enjoyable and interactive than the business plan.)
It also could prove more effective because it remains posted on your wall and can be tweaked at any time. Notable companies currently using this concept are 3M and Ericsson.
The nine components of the map are Value Propositions, Customer Segments, Customer Relationships, Channels, Key Partners, Key Activities, Key Resources, Cost Structure and Revenue Streams.
If you think through these components, you will know exactly who your customers are, why they buy from you, how to market to them, the resources needed to stay in business, cost of operations and how you will make a profit. The map will help you visually see how and if your business idea will work.
It should then be displayed in your office so you can use it once you open your business. It's easy to use and implement and not that complicated to change if needed.
Of course, if a lender wants a written business plan, all you would have to do is take your thoughts from the map/business model canvas and put it into paragraph form. Remember, you ultimately have to do one or the other to determine if your business idea is a good one.
The Business Model Canvas map can be downloaded for free from www.businessmodelgeneration.com.
Through a partnership with the University of Houston-Victoria's school of business, David Summers, business professor, and Eileen Bonner, SBDC advisor, will give a presentation on "Mapping Out Your Business Idea" in April.
Contact the UHV-SBDC office to find out the details of the seminar.
Lisa Barr is a certified senior business advisor for the University of Houston-Victoria Small Business Development Center.