When you’ve been in business as long as I have–and believe me it’s really not the years, it’s the mileage–it’s fair to say that I’ve reviewed a lot of business plans. Some very compelling, most not so much.
The less than great ones are typically chock full of details on every imaginable component of the product or service. They are packaged in a beautiful PowerPoint deck. And there is a spreadsheet laying out the explosive growth that’s inevitably just around the corner.
It often looks very impressive. But, sadly, it is also completely irrelevant if there are not clear and crisp answers to two core questions: Who’s it for? What’s it for?
It’s simply not good enough to describe your target customer group by high level demographics (or as Seth says anyone who pays us money). Can you describe them in distinct, addressable segments? What are your plans to treat different customers differently? Why will they substitute your product for their current preferred solution? What will it take for them to become regular customers and, ideally, brand advocates in the face of current and emergent competition?
Once you’ve painted the picture on the customers you’ve chosen, now tell me exactly what your product and service does for them. Not features and benefits, but solutions, outcomes. Can you articulate what current customer compromise you are alleviating? I want to hear about the hole, not the drill.
Whether we like it or not, in more cases than not, persuading potential customers to shift their attitudes and behaviors–for reasons other than price–is harder than we’d like to believe. Before the explosion of digital commerce, when the cost of procuring information was typically high and consumers’ choices were often limited by how far they were willing to drive, an entrepreneur could often get away with poorly defined customer selection and a less than remarkable value proposition. Today, it’s a huge challenge to even get noticed, much less drive trial and frequent, profitable repeat business.
So before you gather aggregate market statistics and craft your hockey stick financial projections and fiddle with the font size of your pitch deck, get hyper-focused on the two key questions that ultimately separate the winners from the losers.