The New Business Road Test

How large is this segment, and how fast is it growing?

you need to be clear about your mission, aspirations and risk propensity before you launch a lean start-up, before you write a business plan, and before you approach prospective investors.

In order to understand your opportunity in micro-market terms and to demonstrate that your customers will really buy, it is essential to become intimately familiar with the needs of the target segment or segments most likely to purchase your product. Embarking on a lean start-up is one way to gain the familiarity you need. Better yet, you’ll want a

That’s why many astute entrepreneurs are building customer-funded business models, in which the initial cash the company needs is provided by customers so eager for what the new company offers that they’re willing to pay for it, sometimes in advance, whether on Kickstarter or in other settings. We explore these kinds of models in more detail in Cha

how important it is to have a product that offers clear and compelling benefits to a carefully targeted market.

Entrepreneurs are renowned for finding new ways to segment markets that they serve, often behaviourally, thereby creating new segments that they can dominate.

The keys to economic sustainability The economics of a business become sustainable when the company’s business model is sufficiently robust so as to not run out of cash. Economic sustainability rests largely on the following factors: revenue is adequate in relation to capital investment required and margins obtainable; customer acquisition and rete

without differentiated benefits, most customers won’t buy; without a pathway to growth, most investors won’t invest.

good luck can help a new venture, but those best prepared to take advantage of good luck are those whose leading-edge information connections enable them to respond to market changes quickly and adroitly.

If the team needs to be strengthened to better suit an otherwise promising opportunity, the best time to do so is before writing a business plan and before seeking seed capital. Doing this early enables the venture to benefit from the talents, insights and perspectives of the team’s new members.