Quick businessplan to test your idea

March 4th, 2006 by Rolf Erikson

You would like to be an [tag]entrepreneur[/tag] and you have an [tag]idea[/tag]. If you and others should be able to analyse your idea you must write a [tag]business plan[/tag].
But before you start writing you can start with a quick business plan. Then you and others can see if your idea is good enough or if you have to make some changes to your idea in order to get a better outcome.

The quick business plan shall give answers to,

  • What a significant want or need are you going to meet
  • Who the customers are and how you intend to reach them
  • How big your intended market is
  • What margins there are in the market
  • What competition advantage you have
  • What profit potential there is
  • What working capital you need
  • When you will have a positive cash flow

As you see there are a lot of questions you have to think about and have answers to. I will come back to these questions in future post and discuss those in detail so you are prepared when you start writing the real business plan.

About protecting your idea

March 2nd, 2006 by Rolf Erikson

I often heard that we cannot tell a competitor about our project because they will steal the idea. It was often very difficult to convince them that they will not steal it because of the “not invented here syndrome”

So when I read the post You can’t protect a good idea I quite agree with that view,

If I hear one more [tag]entrepreneur[/tag] say “I’ll tell you about my idea, but I need you to sign a Non-Disclosure Agreement first,” I think I’m going to hurl myself out of a window! I can’t think of a bigger red flag to a new [tag]business[/tag] than an entrepreneur unable to share his idea. If someone can sink your new company just because they’ve heard about your idea, it’s probably a pretty lame idea.

If you have a great idea and stash it under your pillow – the entrepreneur fairy doesn’t come along at night to exchange it for a great company. While great companies can benefit from good ideas, they require superior execution.

Instead you should accept that a good idea will be stolen. What you should good at executing your idea The advice is to focus on actually executing on the [tag]business plan[/tag].

I don’t fear the entrepreneur that keeps their idea from me, I fear the entrepreneur that tells the world what she’s going to do and actually makes it happen. That’s the entrepreneur we should all want to be.

Concept and Productivity

March 2nd, 2006 by Rolf Erikson

Mike DeWitt writes about concepts and When Bad Things Happen to Good Conceptsand a Part Two

In Part One, he describes how good [tag]concepts[/tag] can be turned into great applications through definition of proper context, and how those same good concepts could be horribly disfigured by confusing concept with context. As an example he has a pencil sharpener and says,

In concept the pencil sharpener is very simple:
1) A cutting surface (blade) fixed at an angle to the shaft of the pencil
2) A guide for the pencil shaft to meet the blade
That’s it!

A good concept can also be of help when trying to get at better [tag]productivity[/tag]. Starting with Toyota´s “J[tag]ust In Time[/tag] production system” which he describes as a very simple and good context. It took years, but eventually they turned the auto industry upside down with a simple concept: constantly strive to eliminate muda, or waste, in 7 areas:
* overproduction
* transportation
* motion
* waiting
* processing
* inventory
* defects

In Part Two Mike DeWitt takes Eli Goldratt’s The Goal as very powerful concept. The book is simple and straightforward. When the system in question is properly defined allows you to correctly identify the real constraints.

According to Goldratt, in a system with any sort of complexity, there is a very small number (usually one) of real constraints of the throughput of the system as a whole. This could be an actual physical constraint (the machine named ‘Herbie’ in the book), a policy constraint, or a market constraint. The process for improving the throughput of the overall process is as follows:

1. Identify the system’s constraint
2. Decide how to exploit the system’s constraint (since updated to include eliminating the constraint completely if it doesn’t require a huge investment, such as with policy constraints)
3. Subordinate everything else to the above decisions
4. Elevate the system’s constraint
5. Go back to step one and see if there is now a new constraint. Don’t succumb to inertia. Repeat until the constraints are appropriate.

I think these are very interesting articles worth reading and very useful in all sort of [tag]business[/tag] even Service-based businesses.

One key aspect of any good concept is that it has been refined so that all of its parts are necessary, and they constitute a sufficient set to be effective. In other words, it is fairly atomic. If you take anything away, you lose the power of the concept. In our pencil sharpener example, the Bowie knife is an example of omitting one of the key facets of the concept (a guide for the pencil). In the hands of an expert the knife can achieve the same results as a real pencil sharpener, but you wouldn’t mount one in the corner of a kindergarten class and expect good results.