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Chapter 5

Developing and
Testing the
Business Concept
Overview

• Idea to opportunity to business concept

• The relevance of personal goals

• Development of the business concept

• Overview of testing the concept


through feasibility

• Why you should start a business today


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Idea

Opportunity

Business
Concept

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Entrepreneurial Concept Model
Distribution

Benefit or
Product/Service Customer
Value Proposition

ENTREPRENEUR

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Business Concept

• What is the product or service


being offered?

• Who is the customer?

• What is the benefit?

• How do you get the product or service to


the customer?

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Why Do Concepts Fail?

• Not understanding the customer

• No compelling story

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What’s the Compelling Story?

• Why you?

• Why now?

• How do you plan to change the world?


AKA: How do you heal the pain?

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How Do We Avoid Concept Failure?

• We test it

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Feasibility Analysis:
What Does the Market Say?

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Industry Test

• Patterns of change
INDUSTRY ASSESSMENT

• Demographics Market/Customer
Assessment
• Major players Product/Service
Assessment
• Status of technology
Team
Assessment

Financial
Assessment

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Market/Customer Assessment

• Target market Industry Assessment


demographics
MARKET/CUSTOMER
• Customer grid ASSESSMENT

• Competitor analysis Product/Service


Assessment
and grid
• Competitive Team
Assessment
advantage
• Demand Financial
Assessment
• Customer profile
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Customer Grid

Initial Customer Grid for Rhino Records


Customer Benefit Distribution
Baby Convenience and economy: can Retail outlet
boomers find compilations of their favorite
songs without have to buy entire
albums of one artist
Record Provides unique compilations of Wholesale to
stores hard-to-find great hits of the past record store
to satisfy the baby boomer
segment of their market
The busy Convenience of shopping any Internet store
professional time of the day or night having all for online
the information at their fingertips purchasing
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Product/Service Test

• Benefits and features


Industry Assessment
• Current status
Market/Customer
Assessment
• Intellectual property
acquisition PRODUCT/SERVICE
ASSESSMENT

• Plan for prototyping


Team Assessment
and testing
• Tasks and timeline Financial
Assessment
to completion
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Team Assessment

• Current expertise,
Industry Assessment
skill sets,
and experience Market/Customer
Assessment

• Gap analysis Product/Service


Assessment

• Strategic partners
Team
Assessment

Financial
Assessment

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Financial Assessment

• Forecasting
Industry Assessment

• Financial premises Market/Customer


Assessment
• Sensitivity analysis Product/Service
Assessment
• Cash needs assessment
Team Assessment
• Price/margin schedule
FINANCIAL
ASSESSMENT

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Timeline to Start-up

• Is it feasible? Industry Assessment


– Conditions to Market/Customer
go forward Assessment

Product/Service
• Timeline of activities Assessment

from today to launch Team


Assessment

Financial
Assessment

The New
Venture
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Take-Aways

• List what your students took away from the


discussion here in real time

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