In the first three parts of our ‘Street Smart for a Scalable Business Model’ series, we talked about how to identify a big opportunity, develop a vision for that opportunity and then validate that vision in two steps. In the final part of this series, we will talk about putting all the pieces together and getting the business market-ready.

Let’s assume that you have gone through the process of identifying an opportunity, doing some sort of feasibility study and validating the idea with customers. Now it’s time to ensure that the resources are in place to properly execute the idea.

One commonality between most scalable business ideas is that they require a substantial amount of resources to execute properly. This is simply because to make it big you have to spend money. The first step to obtaining the necessary resources is to identify them and create a business plan.

Writing a business plan will help consolidate all of the ideas related to the business in one place, even if the plan is basic. It will also help build momentum for the entire idea, as most major investors and potential business partners will want to see a business plan before getting interested in the idea. In its most basic form, a business plan would contain:

  • Mission, Vision and Opportunity Analysis
  • Marketplace Analysis (Customers and Competition)
  • Marketing Strategy
  • Operational Strategy
  • Information about the team
  • Financial Projections (3-5 years)

Once the business plan is created, it will become apparent how much capital is required to get the business through phase one and what key employees and business partners need to be added to help execute the strategy.

Many times, people think that a business plan is something that gets written once and thrown into the bottom desk drawer. In reality, a business plan should be living and breathing with the business, and be constantly updated as circumstances change. The business plan provides the framework for decision-making as operations move forward, and instills a certain discipline into the business right from the beginning.

With a basic plan on the table, the next step is to develop objectives for the business in the first eighteen months of operations and align those with strategies. The initial business plan, which may be anywhere from a few pages to hundreds of pages, needs to become actionable, something that everyone can get involved in. Within the opportunity and marketplace analysis, objectives can be identified and encapsulated in one sentence. Then those objectives can be linked to strategies that are also one sentence.

For example:

Objective: Convert 25% of trial users to paid customers in the first year of operations

Strategy: Create an experienced business development team and a dedicated customer support team to ensure all trial users are able to maximize use of the software in the trial period.

With a business plan in place, a great team ready to go, the bank account full of money and a set of objectives ready to be realized, everything is aligned to fully realize the opportunity.

And that’s the end of our Street Smarts for a Scalable Business Model series. For more information or to get started on your own business model planning, check out the links below.

Part 4: Imagination and Creativity

+ Download a copy of the business model canvas (click here)


+ Building Blocks – PLAN – the Business Model
+ Strategy Sessions

Crowdfunding Strategy – Summary


Trends and Research – Summary


Read about our collaborative Process

+ Twitter : @LumosBusiness

+ Pinterest : Visualize Trends

+ Discuss : OPEN forum

+ Google + : Hangout

+ RSS : Subscribe

In part 1 of “The Street Smarts for a Scalable Business Model” we talked about thinking big and getting creative as preliminary steps for building scalable business models, while in part 2 we looked at what can be done initially to validate that an idea has big potential. Now, we are going to talk about how to ensure a scalable business model is realistic by validating the idea through real customers.

In the original Startup Article, referenced in part 1 of the series, the author talks about the need for startups to monetize customers and prove that an idea has real traction in the early stages. The best way to accomplish this is to develop a small group of customers and test an initial version of the product or service on them.

Nowadays, the Lean Startup Methodology is becoming immensely popular with technology startups because of its belief that validating a vision through customers is the key to building an effective business. This methodology outlines a process called Customer Development, whereby a startup takes their minimum viable product (MVP) and begins testing it on customers. Once the MVP is out there, the company can begin iterating the original version into something that customers love, thereby validating that the product being created will be valuable enough to the end user that they will pay for it.

Whether or not you subscribe to the Lean Startup Methodology is not important. What is important however, is the idea of basing the original vision in reality by learning from real customers who are using the actual product. Customers will not know whether or not they want something until you put it right in front of them; therefore, a company with a scalable business model needs to be able to test the idea out with customers before building the whole structure of the business and raising big amounts of capital. Clearly there will be a need to deploy some capital to fulfill this step, but it will be a modest amount compared to the amount needed to fund the entire idea.

Now, the essential part of going through a customer validation process is to ensure that you know what to look for when testing the product on customers. If you were to skip the second step of our process, and not go about conducting a feasibility study of some kind, then it will be very difficult to understand which customer responses are meaningful and which ones are not. You need to know what behaviors to look for and what questions to ask when talking with the first group of customers. With no baseline understanding of the customers and the competition, this would be very difficult.

Once you know the questions to ask and the behaviors to look for, it is critical to identify the right type of customer to test the product on. The right customer is the one who you will want to buy your product and who is similar enough to other customers in the other markets you have identified. It is important to test the idea on quality customers rather than a vast quantity of customers who you know nothing about. The key to this entire step is learning. When you know the exact reasons that your product is making customers happy, then you can prove that your entire business model is scalable.

After identifying the right customers, the next step is to create a strategy to connect with them and ensure they are compelled to be involved in the testing process. Customers won’t become involved in the process unless there are good reasons to do so. It is important to ensure that the initial pitch to them is intriguing and well-organized, reassuring them that it won’t require tremendous amounts of work on their part to be involved. In many cases it’s necessary to create basic sales material or a website, as it adds legitimacy to the entire operation.

Once the strategy is in place, it is time to reach out to these customers and start talking to them. For many startups, it may be difficult to find customers willing to participate if you have no previous experience or connections in a given industry. In this case, a little creativity and gumption is required to reach out and convince them to help you through the initial phase.

Overall, customers can help ground the vision behind a new product or service in reality, thus ensuring it has traction and that people will pay for it. This can be a very challenging process, which is why we can help in certain areas. Join us in the final part of this blog series as we talk about putting all the pieces together.

Part 4: Putting the Pieces Together

+ Download a copy of the business model canvas (click here)


+ Building Blocks – PLAN – the Business Model
+ Strategy Sessions

Crowdfunding Strategy – Summary


Trends and Research – Summary


Read about our collaborative Process

+ Twitter : @LumosBusiness

+ Pinterest : Visualize Trends

+ Discuss : OPEN forum

+ Google + : Hangout

+ RSS : Subscribe

In Part 1 of “The Street Smarts for a Scalable Business Model” we talked about thinking big and getting creative as preliminary steps for building scalable business models. Today we will get more in-depth and talk about ways to assess the feasibility of a scalable business model and go about phase one of validating the initial vision.

Undoubtedly, any great idea is the by-product of some incredible intuition by an entrepreneur. It becomes quite obvious, however, that although there are many great ideas out there, very few of them actually get implemented successfully. Simply put, the majority of businesses fail and very few businesses that set out to reach big targets actually hit them (0.5% on average). In my mind, there should be greater emphasis on the business model rather than the idea itself, in order to ensure that there are strategies in place to help the initial idea gain traction.

So let’s assume that you have gone through the imagination and creativity stages to come up with an idea that has big bang potential and a preliminary strategy to match it.
Now it is time to conduct a feasibility study and begin validating the initial vision. The actual time spent conducing a feasibility study is not of paramount importance. What is important, however, is ensuring that key questions are understood before moving forward on any opportunity. For example:

How many potential customers exist in the marketplace could more effectively get the job done using your product or service?

In order to answer this question, an entrepreneur needs to know two important things:

1) What customers in this market need to get the job done
2) How the experience created by their product or service addresses this need

There needs to be some fundamental understanding of the customer and what they need to get the job done, not an attempt to simply place something in front of them that they say they want. Beyond that, it is important to have a grasp on how many people there are doing this particular job and what products or services they use to get the job done currently. For some, it may be very simple to get answers to these questions, while for others it may take months of research. But for all, it is essential to know the marketplace on a fundamental level.

Once this core understanding is obtained, the opportunity needs to be reexamined in a strategic context. If building an understanding of the market helps us validate that the opportunity has big bang potential, then we need to ensure that the required strategies are feasible to execute. Creative brainstorming is good to get the wheels turning for any idea, but a business model needs to be rationalized in more concrete terms. This includes looking at costs, cashflow and resources required to execute a given strategy. For example, a certain strategy may be necessary to reach customers in a specific market, but the costs to acquire a customer using this strategy would put a squeeze on margins and dampen the whole business model.

Overall, it is important to examine the marketplace and ensure that the strategy to reach that market remains feasible. To build a scalable business model requires a focus on not just creating value, but finding ways to deliver and capture that value. This places an equal emphasis between market opportunity and strategic planning, so that no idea is taken to market without at least some idea as to how things will play out. Obviously things will change greatly as soon as market entry occurs, but the entrepreneur needs to have thought the business out and envisioned the basic structure of the business before any sort of operations begin.

Conveniently, we can help with each and every step of feasibility analysis for your business model. Stay tuned for Part 3, as we talk about validating customers in ways that proves the business is scalable.

Part 3: Customer Validation

+ Download a copy of the business model canvas (click here)


+ Building Blocks – PLAN – the Business Model
+ Strategy Sessions

Crowdfunding Strategy – Summary


Trends and Research – Summary


Read about our collaborative Process

+ Twitter : @LumosBusiness

+ Pinterest : Visualize Trends

+ Discuss : OPEN forum

+ Google + : Hangout

+ RSS : Subscribe

In our Street Smarts for a Scalable Business Model four part series, we go through a basic process for creating a scalable business model. The series is meant to encourage people to think big and to provide a basic outline for how to go about creating something scalable – it should not be taken as expert advice, but rather as a way to stimulate some fresh thinking.

An interesting article caught my eye a month or two ago. The article, titled “Toronto Startup’s Need a Paul Graham or Steve Blank” (Startup Article) discusses how the real problem for (Toronto) startups is not raising capital, but rather creating companies that have a scalable business model. After months of seeing presentations, talking to entrepreneurs, and working with companies, I can’t help but wonder if this problem applies to not only Toronto, and to not only startups.

The problem, according to the author of the Startup Article, is that many companies don’t know how to build scalable business models. He contends that a company needs to validate their business concept by monetizing customers and showing some likelihood that there is a scalable business model. The problem is that not many companies are doing this and not many of them know how to do it, not due to a lack of information, but due to a lack of knowledge. The solution, the author contends, is to have the guys with the street smarts and experience lead startups to victory by mentoring them through the whole process.

In principle, I think the author makes a great point. Everyone wants the five-star general leading him or her to victory. But in reality, there are not enough of these types of individuals to go around, meaning the majority of entrepreneurs need to strap on their boots and build a scalable business using their own resources.

So how can an entrepreneur build a business model that is scalable?

The core idea behind a scalable business model is that there are multiple groups of potential customers around the world who can be reached as the business scales up operations. If an entrepreneur understands the experience that their product or service gives one group of users, then they can start to find other groups who will find similar value. To start out, a little imagination and creativity are required.

Seeing a business as scalable requires vision and imagination. The solution that the entrepreneur envisions needs to fill a very prevalent gap in the market. If the gap is big enough, and the problem affects enough people, then the business model has immediate potential to be scalable. Most businesses are simply not meant to be scalable, as they instead tend to focus on meeting a specific need for a niche market. But for the game-changing entrepreneurs who want to reshape the playing field, thinking big is the only option.

Building a strategic model that allows a company to reach and monetize the masses requires a little creativity. Starting to think about strategies right from the beginning helps an entrepreneur ensure that there is a business model, rather than just a business. The difference is that a business model not only focuses on ways to create value, but to also deliver and capture it in new ways. This means finding innovative ways of getting the product or service to the customer and creating new revenue streams.

With some fresh thinking and a little imagination, the seeds of a scalable business model can be planted. If you want to get creative over a cup of coffee, you know where to find us.

Join us in Part 2 of this series as we talk about how to take the initial idea to the next level and conduct a feasibility study.

Part 2: Feasibility Study and Initial Validation

+ Download a copy of the business model canvas (click here)


+ Building Blocks – PLAN – the Business Model
+ Strategy Sessions

Crowdfunding Strategy – Summary


Trends and Research – Summary


Read about our collaborative Process

+ Twitter : @LumosBusiness

+ Pinterest : Visualize Trends

+ Discuss : OPEN forum

+ Google + : Hangout

+ RSS : Subscribe