OK, time for part 3 in my description of how to write your first business summary.
In the previous post, I discussed creating your initial sections Market Opportunity/Problem, Our Solution and Business Model. Having described the opportunity you are addressing, with what product/service, and how you intend to make money, its now time to discuss who you are going to sell your product to. In this post we will cover Markets & Channels, Competition, and Our Advantages.
In Markets & Channels, you need to define not only the end purchaser, but also purchase influencers and the channels you will use to get your products in front of those purchasers. For example, someone who is sick may purchase a prescription medication, but a doctor is usually the one that has defined what should be bought. In this example the doctor is a major influencer on the end customer’s purchase decision. In another example, you may need to get your product into retail stores from where the end purchaser will buy your product. To get it there you have to know what distribution channels are used to get the products from manufacturers to the retail stores, and how each interim purchaser (in our example the distributor and the retail store) makes decisions to carry different products. With this knowledge you define how you will start out selling and how you will grow.
In a similar vein, you may have to define which market niches you are going after first, second, third, etc. For example, one market demographic that defines a niche is geography – you may need to focus on selling locally first, before growing to regional, then national and finally international sales (at least until there are markets on other worlds!!).
If “all the world” is your customer and you don’t know where you are going to start, you probably wont make your sales targets and your costs of each sale will be higher than necessary.
Competition is a big obstacle to you achieving your goals. Don’t think you have any competition? Then maybe you’re not thinking about it broadly enough. Potential competition comes not just from people who are selling similar widgets, but from everyone who is competing for the same purchase dollars as you. For example, movie theaters, sports teams, restaurants, theaters, etc. are all competing for your evening entertainment dollars. One concept that helps me here is something that David Tyreman calls the “vicarious world”. When creating the brand identity for your business, David makes you think not just about the product or service you are selling, but what is the “vicarious world” in which your customers will be able to live by using your product or service.
Identifying all potential types of competition is important in being able to move on and discuss why you are better than them. In developing Our Advantages, you want to compare and contrast your offering to that of the competition. Be honest with yourself here, because if there are areas of weakness you want to identify them and accept them or deal with them – don’t let someone else be the one to point them out.
Make clear what your competitive edge is; describe your “secret sauce”; clearly describe were you are operating from a “Blue Ocean Strategy” and avoiding the Red Ocean of commoditization. This section should answer the question, why you and not the competition?
These six sections are the core of your vision and therefore your first business summary. So after drafting these first six sections you may pause to do further research, prototyping, feasibility studies, before moving on with the other areas. I’m going to pause; and in my next post I will wrap up this discussion of the business summary template.