How nice it is when complex phenomena is made simple to simple minds!
CEOs have to retain this thought in mind, as they navigate their position in imparting their business plan to the team first, before going to investors.
Often CEOs make the greatest mistake of reaching out to investors to make it big, without presenting it before their team. A lean startup model presentation is an apt attempt to get a buy-in from the team.
Creation of a lean Business Model presentation is a must to start with.
Starting with the Problem
The basic questions to be posed are ‘What problem are we trying to solve and for whom?”. The problem is the pain point of the customer. There cannot be any assumption in identifying the problems. If the start is wrong, the end is bound to be wrong. Therefore a market study of the Customer issues are a key in identifying the problem.
Stating the Solution
The solution is not in search of the problem but in identification of the problem.
This ensures the danger of putting solution ahead of the problem.
There cannot be multiple solutions to products and service models. A single solution must fit the identified issue or problem, in order to scale on business. Steve Blank’s customer development model could be a great source of help here
Why the solution – Three Supporting points with data
It is important for CEOs to state why the solution is apt in three points.
Those three points have to substantiate why the solution is the apt solution. Those three points have to be backed up with relevant data from the market.
The Five key Components of Business Model
- Key Metrics – allow you to track and evaluate the success of a specific business process. Support with revenue metrics, lead-generations and sign-ups etc
- Unique value proposition – provides a unique combination of products and services that provide value to the customer by solving the problem or issue. In a simple sentence, why the solution is important to the customer
- Customer Segment – is a way of segregating customers into groups or categories based on location, age or type. Customer segment plays a vital role in choice, type and number of product/service
- Channel of Sales – is the process of distributing a product to the market by segmenting them under categories. eg. sales teams, dealers, retailers, affiliates, or direct marketing etc…
- Cost Structure and Revenue Streams – it is not about convincing someone to invest, but to state it clearly to the team what your number should look like and what is expected in return.
One may ask the question, why should a CEO present his business model to his team. It serves two purposes, namely,
- it helps the team to understand the direction of the company
- It helps the team to understand the reason behind the movie – ‘why they are doing what they are doing.’
The CEO by taking the buy-in from his team, starts his journey on a clear note, before he presents his case to the investor.
Elias Moses, Managing Next