An Online Service Idea - What options?

AnCatDubh

A relative of mine was enquiring about an idea he has to develop an online service. I could advise him as to the 'online'/technology parts of it (at least to a point where I could advise him that he needs to partner with someone who can give time to the idea that it may need to get it developed -- which wasn't going to be me ) but i'm looking for any advice particularly if you have been through a startup situation of getting an online service up and running.

This is a service rather than a order/sale/supply idea. A website with complementary mobile app.

In fairness to him, I think his idea is sound enough and could potentially have a very wide applicability (I know, don't they all) so he should at least bring it through some sort of feasibility process.

Do people of this forum know or can they advise as to what avenues there are in terms of startup / tech development / business. He has some savings set aside for developing the idea. I suspect he will need much more but he probably has enough to get him into a bit more serious consideration.

I directed him to the local LEO as a start and in fairness they were very helpful and supportive - have recommended some start your own business type courses which they can facilitate at very reasonable cost and having never even considered being in business before this is definitely needed.

But what other avenues should he be exploring?

Any advice or experiences which you can share would be much appreciated.

TIA.

AnCatDubh

AnCatDubh wrote: »

A relative of mine was enquiring about an idea he has to develop an online service. I could advise him as to the 'online'/technology parts of it (at least to a point where I could advise him that he needs to partner with someone who can give time to the idea that it may need to get it developed -- which wasn't going to be me ) but i'm looking for any advice particularly if you have been through a startup situation of getting an online service up and running.

This is a service rather than a order/sale/supply idea. A website with complementary mobile app.

In fairness to him, I think his idea is sound enough and could potentially have a very wide applicability (I know, don't they all) so he should at least bring it through some sort of feasibility process.

Do people of this forum know or can they advise as to what avenues there are in terms of startup / tech development / business. He has some savings set aside for developing the idea. I suspect he will need much more but he probably has enough to get him into a bit more serious consideration.

I directed him to the local LEO as a start and in fairness they were very helpful and supportive - have recommended some start your own business type courses which they can facilitate at very reasonable cost and having never even considered being in business before this is definitely needed.

But what other avenues should he be exploring?

Any advice or experiences which you can share would be much appreciated.

TIA.

A good start would be to write a proper business plan, a comprehensive one as if he is trying to raise money. Doing this if you have the right template, it fleshes out the idea much better, and he will get an idea of whether it really is feasible or not. Problems arise you haven't thought of before and so on.

During the business plan he should be identifying who he needs to build this, get rough quotations and establish startup and running costs.

Then you tackle the finance and where thats going to come from. If he gets to that point and everything is still good then its all systems go to build the app/website and prepare for launch - the strategy of which will have been fleshed out in the business plan already.

pedroeibar1

IMO he should do a LEO course first, then follow el Rifle's suggestions. He'd have no idea of what is involved in writing a business plan at this stage, unless he has come from a competitive commercial environment.

Gareth Sherry

Before doing any of that or wasting time with business plans...you need validate the idea.

How do you do this?

Talk to prospective customers.

Lift the phone and ring them.

Find 20 customers who you can get independent honest feedback on the idea.

Pick the main feature of the product which should address just one key pain point. Keep it simple.

Explain to the prospective customer how your new product will help them fix this one problem.

Ask them how much would they pay for it?

Ask them would they even forward pay for it before it's ready on the basis they'd get a deal.

Before you do anything get this feedback then look into seeking funding and business plans etc.

This one step will either let you know you're onto something or whether you should pivot or scrap it altogether.

Don't rely on your gut instinct...get the feedback first.

Gareth Sherry

Gareth Sherry wrote: »

Before doing any of that or wasting time with business plans...you need validate the idea.

How do you do this?

Talk to prospective customers.

Lift the phone and ring them.

Find 20 customers who you can get independent honest feedback on the idea.

Pick the main feature of the product which should address just one key pain point. Keep it simple.

Explain to the prospective customer how your new product will help them fix this one problem.

Ask them how much would they pay for it?

Ask them would they even forward pay for it before it's ready on the basis they'd get a deal.

Before you do anything get this feedback then look into seeking funding and business plans etc.

This one step will either let you know you're onto something or whether you should pivot or scrap it altogether.

Don't rely on your gut instinct...get the feedback first.

If your bouncing ideas off people on whether its got problems, they should be people you know and trust and who are intelligent and skilled enough in the area to give you the type of honest feedback you need, not random prospective customers. Your suggestion is bordering on the ridiculous for a number of reasons which surely are obvious enough not to have to point out here.

The whole idea of writing the business plan is that you work through the whole concept and business strategy you will apply to it. You flesh it out and understand problems you may not have seen before. This is a validation process and far from a waste of time.

dbran

Gareth Sherry wrote: »

Before doing any of that or wasting time with business plans...you need validate the idea.

How do you do this?

Talk to prospective customers.

Lift the phone and ring them.

Find 20 customers who you can get independent honest feedback on the idea.

Pick the main feature of the product which should address just one key pain point. Keep it simple.

Explain to the prospective customer how your new product will help them fix this one problem.

Ask them how much would they pay for it?

Ask them would they even forward pay for it before it's ready on the basis they'd get a deal.

Before you do anything get this feedback then look into seeking funding and business plans etc.

This one step will either let you know you're onto something or whether you should pivot or scrap it altogether.

Don't rely on your gut instinct...get the feedback first.

Getting independent advise of this nature is all well and good but you need to make sure that they dont steal the idea out from under you. They may have no problem getting the necessary resources and knowhow together. Be careful that you dont give away the whole farm!!!

First, if you are not commercially minded, go on a Start your own Business course. A couple of evenings meeting like minded people will give you some sort of overview of the skils that you will need to develop in terms of selling, marketing and running a successful business.

In the meantime, you start to put together a business plan. Consider the effect of competitors on your product, its unique selling point, how much it costs to make and from that how much it should sell for and how much you need to sell for it to be viable. If you do that you should have some notion whether everything is a runner.

Then the next stage is finance and development of the app.

dbran

Gareth Sherry

Deleted User wrote: »

If your bouncing ideas off people on whether its got problems, they should be people you know and trust and who are intelligent and skilled enough in the area to give you the type of honest feedback you need, not random prospective customers. Your suggestion is bordering on the ridiculous for a number of reasons which surely are obvious enough not to have to point out here.

The whole idea of writing the business plan is that you work through the whole concept and business strategy you will apply to it. You flesh it out and understand problems you may not have seen before. This is a validation process and far from a waste of time.

In my experience doing some preliminary work before spending a chunk of time on business plans is really worthwhile. Business plans tend to be a necessary evil you need to go through to get your hands on funding. However most of the time once it's written it can make a good door jam.

Why?

Because it's guesswork.

Things always turn out different to how you expect.

It's ok to use it to flesh out your concept but certainly not to base a decision whether you have a valid business or not.


Take care asking people you know about your idea.

1. Their feedback is biased because they know you and don't want to hurt your feelings
2. They are not your prospective customers

Mostly people are reluctant to speak with customers. It can be intimidating so most avoid it and assume they know what it is their customer wants...

The concept of asking how much a customer would pay for it and if they'd forward pay for it is a gage to test if there's a genuine want there. It's not necessarily to walk away with orders.

Anyhow here's a couple of great resources you should check given the stage you're at...

not sure I can post links yet...

though check out "the foundation" by Dane Maxwell

Dane actually teaches how to set up a business and get it funded by your customers (like a mine kickstarter thing) which is a twist to traditional business models.

and How We Killed A Wantrepreneur by AppSumo

Good luck with it...hope it works out.

Gareth

Gareth Sherry

dbran wrote: »

Getting independent advise of this nature is all well and good but you need to make sure that they dont steal the idea out from under you. They may have no problem getting the necessary resources and knowhow together. Be careful that you dont give away the whole farm!!!

First, if you are not commercially minded, go on a Start your own Business course. A couple of evenings meeting like minded people will give you some sort of overview of the skils that you will need to develop in terms of selling, marketing and running a successful business.

In the meantime, you start to put together a business plan. Consider the effect of competitors on your product, its unique selling point, how much it costs to make and from that how much it should sell for and how much you need to sell for it to be viable. If you do that you should have some notion whether everything is a runner.

Then the next stage is finance and development of the app.

dbran

Don't fear people stealing your idea.

This is a common concern new businesses have. They are precious about their ground breaking new idea and afraid to share it with anyone.

But I can assure you risk failure much more by not sharing and getting the necessary feedback for your idea than you ever would someone stealing it.

The reality is...

Prospective customers won't have any interest in stealing your idea. They just want you to solve their problem.

Also if you haven't the drive, passion and ability to get your idea to market ahead of someone else...chances are you won't make it anyhow.

Finally, most of us think our idea is really unique. Chances are it's already been done. And if it is...that's actually a good thing as competition actually validates your concept. There's already someone making money from it and you can too.

Gareth Sherry

Gareth Sherry wrote: »

In my experience doing some preliminary work before spending a chunk of time on business plans is really worthwhile. Business plans tend to be a necessary evil you need to go through to get your hands on funding. However most of the time once it's written it can make a good door jam.

Why?

Because it's guesswork.

Things always turn out different to how you expect.

It's ok to use it to flesh out your concept but certainly not to base a decision whether you have a valid business or not.


Take care asking people you know about your idea.

1. Their feedback is biased because they know you and don't want to hurt your feelings
2. They are not your prospective customers

Mostly people are reluctant to speak with customers. It can be intimidating so most avoid it and assume they know what it is their customer wants...

The concept of asking how much a customer would pay for it and if they'd forward pay for it is a gage to test if there's a genuine want there. It's not necessarily to walk away with orders.

Gareth

Doing preliminary work and giving your idea to 20 strangers are two different things.
Of course the idea should be bounced off a couple of trusted people, but not people who can grab your idea and run with it.

Good entrepreneurs have good ideas, unique ideas, so your other statement about how someone is probably doing it already is not fair. Your assuming his idea is already being done. In the technology arena especially there is a constant stream of new ideas and new applications. Ironically you usually find these out when you write up the 'competition' part of your business plan.

Im in the process of building a serious app at the moment. Its a highly sensitive idea that Ive had to be very careful who I gave in the information out to, because the concepts it in are in many ways unique and not currently being done in the European market.

My process of developing this app is almost at an end after close to one year since the idea.
My process was the following: Came up with the app concept. Bounced the idea of an aficionado in that area, who highly approved. Next I went to a technically minded person who I trusted and consulted him about possibly building something like this. He gave positive feedback as well.
Next I wrote up a business plan, found a variety of problems which took a month or two to find solutions for. Found solutions, figured out how much money I needed, financed it and hired a few people to build it.

The process of doing the business plan as I keep saying validates the idea because you understand the competition better, the threats and weaknesses of your business. In this way you figure out if this business is a runner or not.
You don't need a start your own business course to do that.

I understand a lot of people will disagree with me on the issue of taking these courses etc, but I did a 4 year degree in marketing and management that might as well be in the bin. I can't think of anything it helped me with in the last 15 years in business other then understanding accounting better.
You can establish a market by doing the right research, and being smart. Lets not assume this kid is a simpleton and that he needs to do some handholding course to go through a simple process. The internet is full of business plan templates and advice.

Gareth, seriously how the funk would you know if prospective customers won't be interested in stealing the idea?
If some kid rang me up and said 'hey, you dont know me I just want to pitch you a business idea and ask you would you buy it if I started the business'. If that kid had a brilliant unique business idea and was naive enough to flaunt it to a random group of test subjects that may buy his product, he would deserve to have it copied and done before he made it to market in my opinion.

Some businesses are a lot harder to start up then others, but when it comes to mobile apps, it is a thriving competitive business where ideas can be turned into reality very very fast.

Gareth Sherry

Deleted User wrote: »

Doing preliminary work and giving your idea to 20 strangers are two different things.
Of course the idea should be bounced off a couple of trusted people, but not people who can grab your idea and run with it.

Good entrepreneurs have good ideas, unique ideas, so your other statement about how someone is probably doing it already is not fair. Your assuming his idea is already being done. In the technology arena especially there is a constant stream of new ideas and new applications. Ironically you usually find these out when you write up the 'competition' part of your business plan.

Im in the process of building a serious app at the moment. Its a highly sensitive idea that Ive had to be very careful who I gave in the information out to, because the concepts it in are in many ways unique and not currently being done in the European market.

My process of developing this app is almost at an end after close to one year since the idea.
My process was the following: Came up with the app concept. Bounced the idea of an aficionado in that area, who highly approved. Next I went to a technically minded person who I trusted and consulted him about possibly building something like this. He gave positive feedback as well.
Next I wrote up a business plan, found a variety of problems which took a month or two to find solutions for. Found solutions, figured out how much money I needed, financed it and hired a few people to build it.

The process of doing the business plan as I keep saying validates the idea because you understand the competition better, the threats and weaknesses of your business. In this way you figure out if this business is a runner or not.
You don't need a start your own business course to do that.

I understand a lot of people will disagree with me on the issue of taking these courses etc, but I did a 4 year degree in marketing and management that might as well be in the bin. I can't think of anything it helped me with in the last 15 years in business other then understanding accounting better.
You can establish a market by doing the right research, and being smart. Lets not assume this kid is a simpleton and that he needs to do some handholding course to go through a simple process. The internet is full of business plan templates and advice.

Gareth, seriously how the funk would you know if prospective customers won't be interested in stealing the idea?
If some kid rang me up and said 'hey, you dont know me I just want to pitch you a business idea and ask you would you buy it if I started the business'. If that kid had a brilliant unique business idea and was naive enough to flaunt it to a random group of test subjects that may buy his product, he would deserve to have it copied and done before he made it to market in my opinion.

Some businesses are a lot harder to start up then others, but when it comes to mobile apps, it is a thriving competitive business where ideas can be turned into reality very very fast.

Good for you El Rifle...

It's possible a customer might steal the idea...though so highly unlikely the risk in my opinion is worth the reward of the valuable feedback.

If you're pitching to customers, it's likely that customer's focus is on their own business not waiting for app development opportunity.

In my opinion the risk of relying on the opinion of 1 or 2 people is much greater.

All I'm saying before going and spending a year of your life of something find out if someone will buy the thing first.

Create an MVP if you have to, get some customer feedback otherwise the risk is just too high IMO.

Btw the "brilliant unique ideas" only become brilliant when they are executed on which takes time, talent, money, commitment and perseverance.

In my experience, ideas are abundant...it's who can get out there and can sell it most effectively wins. If you've really taken the time to listen to what your customer wants and you can deliver that product or service, then selling it becomes much easier.

Graham

Realistically speaking the probability of the idea being truly unique are almost non-existent, they are almost always variations on an existing theme/product/service.

Even if the idea is unique, the chances of you finding someone interested enough to steal it are remote, finding someone capable of executing it well are even more remote.

Sure ideas are abundant, and people will rarely steal them. But you can't assume every idea has been done, and won't be stolen. Your doing the OP a disservice by giving him that advice. Far too many assumptions there. If he did have a brilliant idea and he followed your advice he could very well shoot himself in the foot and lose before he has even started. I will give the founder the respect that he has a good idea with some potential.

Take it a step further and lets say there are some people doing it already and the OP has come up with a unique selling point/change in concept. Is it a smart move to broadcast that? I dont think so.


Your saying its better to pitch 20 random potential customers instead of 2 knowledgeable and trusted people.

So lets look at that. Who's the kid gonna call? If its a business to business app, is he pitching the secretary, or the marketing manager, or the CEO? It needs to be a decision maker right? Otherwise the data received is pretty useless. Pitching 20 CEO's about a business idea and getting feedback is going to take a lot longer then writing a business plan. Ever tried getting through to 20 CEO's of SME's to sell something? Very very difficult.

Are these CEO's really going to put their time into their advice and really think it through like a loyal and trusted friend/advisor? I dont think so. Maybe a couple would be nice enough to do it, and not ruthless enough to steal the idea if it was good enough. If a guy is running a company with software engineers and programmers, no skin of his nose to put a simple app into development downstairs.

If its not business to business and he wants to get feedback off the street, are 20 random punters off the street a reflective and good enough sample to base your decisions on? I dont think so. I for sure wouldn't let 20 random strangers who are most likely not entrepreneurial make my decision as to whether there is a market for me or not. Maybe if I had a few grand and I had established in my business plan that I had such little knowledge on the market that I needed to put together a proper focus group to really help me decide if it has potential or not. Then I would do it, and I would have them sign NDA's before coming into the focus group.

Sorry but I just can't agree with what your recommending. Maybe Im overestimating what the OPs relative has, but I'd prefer to give him the benefit of the doubt.

Graham

Graham wrote: »

Realistically speaking the probability of the idea being truly unique are almost non-existent, they are almost always variations on an existing theme/product/service.

Even if the idea is unique, the chances of you finding someone interested enough to steal it are remote, finding someone capable of executing it well are even more remote.

The very app I'm developing at the moment, is not unique in one part of the world, but its unique in another. Ie. its being done in the US, but not in Europe.

Where would your opinion stand on that? And also to the point above I mentioned, lets say its a variation, and there is some special sauce you have come up with to make it brilliant. Where would you stand on declaring that kind of information to the public before you have started?

And one more question Graham! How valuable is a brilliant idea that has yet to be executed if its put into the hands of someone with a track record of successfully executing new businesses?

Graham

Deleted User wrote: »

The very app I'm developing at the moment, is not unique in one part of the world, but its unique in another. Ie. its being done in the US, but not in Europe.

Where would your opinion stand on that?

Sounds like you're agreeing with me, very few unique ideas.

Deleted User wrote: »

lets say its a variation, and there is some special sauce you have come up with to make it brilliant. Where would you stand on declaring that kind of information to the public before you have started?

Tell me the secret sauce and I'll give you an opinion, chances are (and this is no comment on you) that it's a sauce that's already been spread over other foods.

Deleted User wrote: »

And one more question Graham! How valuable is a brilliant idea that has yet to be executed if its put into the hands of someone with a track record of successfully executing new businesses?

There's no doubt it has an increased chance of success if it's being executed by someone that's already successfully executed something similar. It does beg the question, if you're so confident about your ability to execute why are you worried that someone else is going to come along and execute faster/better?

There is no right and wrong answer here but there is an incredibly valid argument to be made for validating your market before you produce something that may not have a market. That's very different to saying 'if you keep it secret you will fail'.

Graham

Graham wrote: »

Sounds like you're agreeing with me, very few unique ideas.

Of course, but you can't rule out the possibility of the idea being unique.

Tell me the secret sauce and I'll give you an opinion, chances are (and this is no comment on you) that it's a sauce that's already been spread over other foods.

I think that is a little shortsighted, only considering the industry we are talking about. Mobile apps is probably the most dynamic fast moving industry today. Can you think of a faster one? New ideas and concepts are coming out constantly. If we rewound a few years and this kid had come up with Halo, Tinder, Whatsapp, or Snapchat would it be clever of him to make that idea public?

There's no doubt it has and increased chance of success if it's being executed by someone that's already successfully executed something similar. It does beg the question, if you're so confident about your ability to execute why are you worried that someone else is going to come along and execute faster/better?

I can think of a few things - first mover advantage in the market. If you can't patent something or protect it, this is and can be a game changer.

In the case of the app Im developing, I plan to sell it into a certain industry. The biggest threat I have established in making it a success is if some of my main targets have this under development already and will already have it ready when I walk in to sell it to them. They are not currently offering it but I think theres a good chance some of them have it under development. The last thing I would want to do is in some way expedite them doing it, and give them the bells and whistles my concept might have. Also those targets I am concerned about they have much deeper pockets then I do and a much bigger team already established that could develop it much faster then I could. Big risk.

There is no right and wrong answer here but there is an incredibly valid argument to be made for validating your market before you produce something that may not have a market. That's very different to saying 'if you keep it secret you will fail'.

No doubt, I don't disagree about validating your market. The disagreement is how you make that validation without putting yourself at risk.

Gareth Sherry

El Rifle,

it seems to me you're looking for assurance from the forum that you have taken the right steps to develop your app.

Graham has probably helped you out on that front

"There is no right and wrong answer here"

I pitched in to offer genuine advice to AnCatDubh starting off with a new business idea.

I have stated what I think works...if it helps, great...if not so be it.

Though I've no interest in continuing tit for tat arguments...it's a waste of my time.

hope your app works out,

G

Gareth Sherry

Gareth Sherry wrote: »

El Rifle,

it seems to me you're looking for assurance from the forum that you have taken the right steps to develop your app.

Graham has probably helped you out on that front

"There is no right and wrong answer here"

I pitched in to offer genuine advice to AnCatDubh starting off with a new business idea.

I have stated what I think works...if it helps, great...if not so be it.

Though I've no interest in continuing tit for tat arguments...it's a waste of my time.

hope your app works out,

G

Well you can assume that if you want. I have enough business experience and confidence in what Im doing not to look for validation from the likes of yourself.

The difference is simply I'm speaking from experience and brought up my recent activity as a point of reference. Its an interesting side project for me, something that I have put my experience from many different startups into.
I think the OP was coming here looking for advice from people with experience. Im not trying to have a pissing contest with you, you could be ten times more successful then I am. I just firmly believe you gave the OP bad advice.

Gareth Sherry

well that's the beauty of opinion...we're all entitled to one.

gargargar

Don't waste your time with a business plan. Certainly the future financials. I have never seen one that matched reality. Load of waffle.

I would suggest to you the lean canvas to test all assumptions. Will help with a SWOT analysis.

gargargar

gargargar wrote: »

Don't waste your time with a business plan. Certainly the future financials. I have never seen one that matched reality. Load of waffle.

I would suggest to you the lean canvas to test all assumptions. Will help with a SWOT analysis.

This kind of advice has more place in a circus then a business forum.

gargargar

Deleted User wrote: »

This kind of advice has more place in a circus then a business forum.

I must have touched a nerve there. I don't mean anything personal against you, or how you have gone about things. I am giving the original poster some advice.

I have been involved in several online business, both product and service. I have been involved in drafting business plans, one of which was a finalist in the seedcorn competition. They were nowhere near as useful as using the lean canvas method. The lean canvas is a distilled version of a business plan with all the guff removed.

You didn't hit a nerve at all. But your telling a guy not to write a business plan and not to write up his costs and profit forecasts, and that its a waste of time. And then you tell him to do a swat analysis which is part of a business plan!

I seriously don't know how you can advise someone starting out to do that. It goes against all business logic.

How are you supposed to know how to run the business if you dont know how much you are going to spend, and how much profit you can potentially make?

Ive just read a few articles on "Lean Canvas" since I hadn't heard of the concept before.

Heres an article that is positive on the concept https://hbr.org/2013/05/why-the-lean-start-up-changes-everything

But I see things like this in there
". No one besides venture capitalists and the late Soviet Union requires five-year plans to forecast complete unknowns. These plans are generally fiction, and dreaming them up is almost always a waste of time."

I just don't understand a statement like this. Banks and Serious investors require 3-5 year plans of profit and loss. Any professionals who invest in startups will require numbers, hell the first thing a guy should do when he thinks up an idea is to figure out how much he can sell it for and what his cost of sale is.

If all forecasts and plans were fiction and dreams, why would the professional and most disciplined investors require them. If you went onto dragons den or shark tank and didn't know your numbers you would get laughed out of the place. A bank wouldn't even start to review your idea for a loan without numbers.

Gareth Sherry

[Deleted User] wrote: »

You didn't hit a nerve at all. But your telling a guy not to write a business plan and not to write up his costs and profit forecasts, and that its a waste of time. And then you tell him to do a swat analysis which is part of a business plan!

I seriously don't know how you can advise someone starting out to do that. It goes against all business logic.

How are you supposed to know how to run the business if you dont know how much you are going to spend, and how much profit you can potentially make

Heres the diagram of a lean canvas model. Surely if you answer all these questions posed, your going to end up with the guts of a traditional business plan, just using some different terms?

So what am I missing here gargar?

pedroeibar1

gargargar wrote: »

Don't waste your time with a business plan. Certainly the future financials. I have never seen one that matched reality. Load of waffle.

I would suggest to you the lean canvas to test all assumptions. Will help with a SWOT analysis.

Lots (most) business plans do not match reality. But they are needed. They make a person focus, ask questions, think. They also prove to backers that you have a brain and a plan, even if it has to be revised. There is no point in trying to write a business plan if there is no basic business knowledge. Hence doing a LEO course first. Crawl. Stagger. Walk. Run.
SWOT analysis is just more BS unless the basics are understood. Cart. Horse.

Here is a basic template for a business plan. I don't think its that difficult to be able to complete something like this. Sure with more experience you will prepare it better, but I would be of the opinion someone with good initiative could adapt their ideas to these headings and with a bit of diligence, research and hard work come up with a good plan.

I also think to assume most plans are pie in the sky, is referring to a small part of it which is generally the sales or profit forecast from an over enthusiastic entrepreneur. And if it is the case the investor will tell you its a dream and not give you any money. Good business plan + good pitch you get your investment. Bad business plan you dont.
If Pedro is right and the person needs to do a course to be able to write one of these that is in fact realistic fair enough he might be right even if I disagree. But to say most business plans do not match reality is really short selling the person writing it.

1. Executive Summary/introduction
2. Company Overview
3 Founder
4. Starting the company
4.1 Corporate setup and Company Formation
4.2 Corporate Image Design
4.3 Organisational Structure
5. Business Model
6. Marketing and Sales Strategy
7. Competition
9 Growth Opportunities
10 Investment Opportunity

Annex - Startup costs, sales forecasts.

gargargar

I never said to do no planning, I said not to write up a business plan. It is how you use the canvas that is the value. With a business plan you write it up and most people don't refer to it unless they need to send it to a bank/investor.

With the canvas you put it up on a white board in your office/bedroom or whereever. You constantly update it. You look at what assumptions you have made and change/challenge them. It becomes an integral part of your business where as, in my experience, business plans live on a computer hard drive.

Writing up pages on founder experience and company overviews isn't really going to help make it a success. With the lean method you are supposed to go out and challenge your assumptions. Go back refine and learn.

We had an idea for an online tool to help web shop owners convert sales i.e. people returning multiple times to a page and not buying. Similar to seeing someone come into a physical shop a couple of times to look at a bike. In the shop the assistant knows they want to buy it and prompt them, but on a site there isn't that recognition. Anyway, we thought it was a good idea and where thinking of developing. At that point we put the canvas on a white board and spent about two months researching. Filling it in and talking to potential customers (contacted about 100 stores and got interviews with 10). We got some positive feedback but ultimately we decided not to proceed. It was still a very rewarding (not financially!) experience.

gargargar

gargargar wrote: »

I never said to do no planning, I said not to write up a business plan. It is how you use the canvas that is the value. With a business plan you write it up and most people don't refer to it unless they need to send it to a bank/investor.

With the canvas you put it up on a white board in your office/bedroom or whereever. You constantly update it. You look at what assumptions you have made and change/challenge them. It becomes an integral part of your business where as, in my experience, business plans live on a computer hard drive.

Writing up pages on founder experience and company overviews isn't really going to help make it a success. With the lean method you are supposed to go out and challenge your assumptions. Go back refine and learn.

We had an idea for an online tool to help web shop owners convert sales i.e. people returning multiple times to a page and not buying. Similar to seeing someone come into a physical shop a couple of times to look at a bike. In the shop the assistant knows they want to buy it and prompt them, but on a site there isn't that recognition. Anyway, we thought it was a good idea and where thinking of developing. At that point we put the canvas on a white board and spent about two months researching. Filling it in and talking to potential customers (contacted about 100 stores and got interviews with 10). We got some positive feedback but ultimately we decided not to proceed. It was still a very rewarding (not financially!) experience.

Looking at this system and its origins its seems like a very academic way to do things, in that it was created and expanded upon by theorists and not so much practitioners.
Many of the proponents of it say how a business plan can take weeks or months to complete, and this cuts a lot of that time, but going by the above template to me it seems more complicated way to validate a startup then a standard business plan. A lot of questions that would take a lot of time to answer properly, and the whole lean concept is about writing and revisiting and pivoting on your existing ideas. The very nature of that takes time, so I dont see how this can be proposed as a streamlined or more efficient way to validate a business idea then a business plan.
Its seems it would be far applicable to an existing and ongoing business looking to improve itself, create more revenue, have lots of healthy brainstorming.

If you compare the template of the canvas to a business plan, many of the questions in it are pretty much the same thing asked in a more academic/buzzword way:
Eg: What is the most important cost inherent to our business model? -

This question basically tells you to establish your different costs and rate them based on importance. Doing a 3 year cost forecast is simply a few taps of a calculator more then that. To call that a waste of time, and your not the only one who did that, the guy who was published in the harvard business review also said it, but its just not true. Doing that extra ten minutes work or whatever it is, provides you with a good understanding of your costs moving forward. You need to know this stuff running a business.
Its also handy to have a spreadsheet on your hard drive to go back to. The original figures template and profit and loss I did for my current construction project I return to at least once a month, adjusting the numbers where costs have changed in order to update in real time investors on profit/loss/yearly returns. Creating that template with all the important numbers was one of the early foundations of the business. I actually could not have started the business without doing it.

All the questions in Customer Relationships/Channels/Customer Segments in the lean canvas is basically Sales/Marketing/Target Market if you look at the subheading questions.

What value are our customers willing to pay? - Whats price are we going to sell the product at?

If I was looking at starting my first business and I was presented with both templates the lean canvas would be far more daunting, simply for the way it asks many simple questions in a more difficult way. Its much more geared to university graduates, and theory based. In the case of doing that Pedro would be 100% right you couldn't do it without some education/training.

Its biggest fault is it doesn't consider the investment factor and where thats going to come from, which is a huge part of starting a business, much too important to be ignored.

I would say overall the lean canvas template would be a very healthy thing to have in an existing business to have a continuous flow of ideas and brainstorming - in the R&D department, or amongst the owners, top management.
But to spend so much time doing something like this in order to validate a new business idea, and when your finished, not have many of the fundamentals in place you need to move forward, it is much too flawed in reality and practice.

Gareth Sherry

The main difference between doing a business plan or going down the lean canvas, or more recently the lean startup approach is validated learning.

You have an hypothesis about what value you can add or how you can serve a customer and you go out an validate it by speaking with those potential customers and the adjusting your hypothesis. In others will they buy your thing? If not, why not?

On the other hand a business plan is something you write up based pretty much on what you can research in house.

I have actually tried both methods and categorically say that using a lean startup approach where you take a small step, test it out, pivot if needs be and move on is much faster and safer method of launching a product.

I agree with the need to set out a plan, it's just I believe it's much more beneficial to get stuck into testing sooner.

When you're creating a Saas product, you must engage with the customer at the earliest opportunity you get because they will tell you what features are absolutely necessary. It sounds from your original message that this the first time you are going to build a software product so try to keep it to "one problem, one solution". The bells and whistles can follow.

Only when you have a good picture of exactly what it is you need to build should you proceed with finding an appropriate developer, establishing costs, pricing etc.

If you can find customers who are keen for the product now, then it's worth you while investing the time and money into more in depth research.

You can then access feasbility grant of I think up to 20K from your local enterprise board.

At that stage they'll need you to prepare a business plan. They'll even offer assistance in writing out the plan by providing access to mentors etc. Plus the feedback from customers will make it easier to get accepted for the grant assistance.

Though I stress, validate the business idea first yourself WITH potential customers.

Don't rely on a business plan to validate it because even the most brilliant business plan wont tell you if someone will buy the thing or not.

The biggest mountain you'll face is finding customers for your thing. The best way of doing that is making exactly what they want.

P.S. Interesting to hear Gargar getting the feedback from customers first and still deciding not to proceed in spite of positive feedback. Contacting 100 stores for 10 interviews was still the best first step to take and for what it's worth your idea was a good one. A simple plugin to popup when a user returns a few times would be a great converter. Though remarketing is probably catering for alot of that nowadays.

kaloshma

Setting an online business can be a little bit expensive at first and also at the sametime time consuming.

But the best thing to do is to outsource what services you might be needing either the SEO, web development and any other related part.

You can get cheap and quality hires from online webmaster forums hiring sections. Just post your job there and you would be suprise at how less quality service cost.