Business Planning

By: Gil Pinheiro

Plans always change.

Everyone who spends time with tech startups knows the pain and joy of pivoting. In my experience the changes that happen aren’t so much radical changes of direction, but more like course corrections. You never stop increasing your understanding of the customer and the product space. Research time only has a limited effect. You need to be actually implementing your model to test it.

We’ve never been fans of ‘systems’. There is no formula for success here. For every piece of good advice, there has been an example of a bad one. The only advice you really need to sweat over is what you hear from your customers. That being said, we’ve read many of the same books that everyone seems to have read.

Whether or not we use those tools, they do provide a lingua franca for communication. For instance, today I’m going to review our first attack at a business plan through Steve Blank’s business model canvas technique. It is simple and visual, and require spending a bunch of time on process and rules.

Just in case we pivot drastically, our initial product is a customer feedback widget that can be placed inside a store or restaurant. It serves to be a fast way to keep track over time of customer sentiment without forcing people to fill out forms or install a random application. Ratings can be provided near the time of actual purchase/interaction which should result in more and higher quality (more representative) ratings.

I’m going to rush through each section here. It’d be too easy to be long winded in an attempt to cover all the possibilities so that as the goals change I’d be able to point out that it we’d already thought of everything. Bullshit-by-overcompensation. I’m going to focus on what our primary plan is, and leave out the fallback product variations (which might come up in future articles, since I still think they are pretty cool).

Consumer Segments:

On its face, the customer is anyone who wants to gather customer feedback. Restaurant owners, store owners.

The larger group here is franchises. Oversight wants to make sure their name isn’t being tarnished by a bad franchise. Collecting and monitoring that feedback is how these brands build their reputation.

Average people can use our data as social proof of whether or not a business is worth visiting. Yelp, and Google provide similar services, but typically have such small sample sizes that the data is not trustworthy.

Value Propositions:

A simple and fast way to gather user feedback without slowing down your customers. We can provide it very cheaply, and with minimal impact (install, maintenance, etc.). For the franchise management we provide the data that they need without requiring additional process and effort from the franchisees.

For the consumer we provide a way to make their voices heard in an anonymous way, and a place to go to find out what local businesses are worth doing business with by their public ratings.

Channels:

We see the product as a commodity, one which has to be supplied at fairly low unit cost. From our experience with hardware, this makes it hard to sell via retail type channels. We see our primary channel being sales (at least initially) being via our website (via adwords).

Consumer Relationships:

As described, a key part of the value proposition is low-cost. We know that the value of the data we provide is tracking trends over the long term. Our relationship with our customers follows that lifecycle.

Revenue Streams:

Because of that long-term relationship and our relatively low margin hardware, we’d like our primary revenue to be from add-on services. Modestly priced features that add value to the basic data collection, like special reports, aggregations, and real-time alerts that will be offered in a SaaS fashion. We are also considering limiting non-service-subscriber devices to public ratings, making private feedback a pay feature.

Customers arriving to find local business can be monetized via advertising.

Key Activities:

  • Design and create a process for the cost effective manufacturing of our hardware device.
  • Design and creation of our software service for feedback analysis
  • Design and implementation of public facing search and ratings

Cost Structure:

As founders that have most of the necessary skill set to implement the product, we are able to take on a great deal of risk at very little financial cost. This applies to both R&D; stages and right up through to small scale manufacturing. Our current budget is $25k to production quality hardware (including the first 100 units) & software. We've done this before, so while that number does seem small from an external perspective, we are pretty confident that we can get to where we need to be on that amount of cash.

Key Partnerships:

This is mostly undefined, but of relatively little worry at this point. We do have vendor relationships that trust and we will likely continue to use for components, plastics and other consumables, but the beauty of the last decade has been the commoditization of these things, which makes it fairly easy to change vendors if issues arise.

In terms of go-to-market, we have identified a number of potential partners that would be an asset but we are waiting until we have at least alpha-quality stuff to begin the approach process. It would be unfair to name names, when they haven’t even heard of us yet.

Summary

And like I said at the start: Plans always change. I’ve put up a living version of this plan as a Trello page, which I will attempt to keep up to date over time. Hopefully this lives as a record of how our own views have changed in the face of reality. The goal of the live document is slightly different - I’ll be using it as a storehouse for ideas and alternate strategies, whether we decide to pursue them or not. Please don’t take it to represent a lack of direction or focus.

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