First of all, there are three basic phases: evaluation, planning and execution. Opportunity Evaluation:
this is the step where you ask the question of whether there is an
opportunity worth investing in. Investment is principally capital,
whether from individuals in the company or from outside investors, and
the time and energy of a set of people. But you should also consider
other assets such as intellectual property, personal relationships,
physical property, etc.
Planning: Once
you have decided that an opportunity, you need a plan for how to
capitalize on that opportunity. A plan begins as a fairly simple set of
ideas, and then becomes more complex as the business takes shape. In
the planning phase you will need to create two things: strategy and operating plan.
Execution: This the part of the process where you are not asking questions but actually carrying out your plans.
Although it is
natural to think of these three steps as occurring sequentially, they
are actually proceeding in parallel. Even as you begin your evaluation,
you are forming at least a hypothesis of a business strategy. As you
test the hypothesis, you are beginning to execute the first steps of
your marketing plan (and possibly also your sales plan). We separate
these ideas for convenience in description but it is worth keeping in
mind that these are ongoing aspects of your management of the business.
The following table summarizes the elements of this analysis:  To take this analysis one level deeper, we can break down each of these phases as follows. Opportunity EvaluationIt is helpful to think of the evaluation step as continually asking the question of whether the opportunity is worth investing in. You are actually constructing and then continually revising an "investment prospectus." There are five basic questions that you should ask as you evaluate an opportunity.
If you can answer all of these questions affirmatively, then you have persuaded yourself that this opportunity is worth investing in. This is the first step toward being able to convince others, whether they be prospective customers, employees, partners or providers of capital. These ideas are developed in the Opportunity Evaluation section PlanningStrategy There
are four main areas of strategy: determination of the target customer
set, business model, position and objectives. These are described
briefly below and in more depth in the sections devoted to these topics.Target customers
The target customer is the set of potential buyers who are your focus as you design your company's solution. The more you know about them, the better off you are. Your characterization should be both qualitative and quantitative. You should investigate any alternatives the customer has for solving or working around the problem or need that you are targeting. You should understand the buying process in detail, including who are the decision makers and who influences the decision. Business Model
The business model is your theory about how you will make money. It involves a definition of a solution to the customer's need, an hypothesis about how and how much the customer will pay for that solution. If there are any assumptions required for your theory to be true (such as the existence of complementary product or services, or the customer's willingness to change business processes) these should also be articulated. Position "Position" refers both to how your company is differentiated from any competitors and also how it relates to other companies in the value chain. This is an opportunity to define, at a fundamental level, what your company will do and what it will not do. An element of position is your company's vision: how it wants to be known or thought of. A compelling vision is necessary to inspire investors, recruit and motivate employees, and to excite customers and partners. Objectives As a first step toward creating your operating plan, you should create a set of high level objectives for your business. This should include:
These ideas are developed in the Strategy Development section Operating plan Your
operating plan is where you spell out all of the things that you plan
to do and what they will yield for your business. The activities will
cover all areas of the business: marketing, selling, engineering, etc.
These activities should yield products by a certain date, possibly partners, customers, etc. These activities will drive the financial performance of the company.Your operating plan will be a combination of plans, i.e., these people working on this topic for this period of time will produce result X, and forecasts or projections, i.e. predictions about what results will occur. The primary and most important forecast concerns revenue, but predictions about costs of materials and other things may be important as well. The operating plan is the core of your business, and you should make it as good as you can - your plans should be as thorough as possible and your forecasts should be based on the best and most complete evidence you can compile. Begin with your strategy and break down what needs to be accomplished to achieve your objectives - this is the basis of your plan. The more detailed and fine grained analysis you can develop, the more accurate and reliable your plan will be. Company timeline This is a representation of all the major accomplishments or deliverables that are necessary for you to achieve your strategy. Staffing plan This is the document where you capture all of the hiring your firm will do (skills, experience and timing). The
budget is where all the pieces of the operating plan come together and
are expressed in financial terms. This is a critical document for
managing your business. Planning process |
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