Tips to help you take the step
What distinguishes a good business idea?
The simple answer is that if it is possible to make money from an idea and the natural follow-up question is: how do I do that? A good business idea should be able to answer the following questions:
- Who is the client?
- What need of the client will the business’ product solve?
- What is the product?
- Which benefits or values will the product create for the client?
- Why should the client buy this product and not someone else’s?
There are other aspects of what a good business idea contains and a large part of it is comprised by the single business owner’s ambition. How much money is to be made and what other values will be created in the business? Some decisive aspects of a good business idea are the three potentials.
Three aspects of the potential of the business idea
The client potential – The more clients you will solve a large or important problem for, the more client value you create, which they are willing to pay for – the more money there is to earn. This is usually called market potential.
Profitability potential – The more the clients are prepared to pay, in relation to the business’ cost for realizing the client value, the more exchange or leverage the business idea holds, and through this a large margin. If the realization cost is dependent on volume, i.e. that it will become relatively lower with each new client – the business idea is usually called scalable.
Competitive potential – The more unique and difficult to copy your created client value and delivery manner are, the stronger is the business you can build your operations on. By stronger we mean the ability to compete with other businesses trying to sell to the clients as well; existing and future competitors. Those prerequisites we call the business’ enduring competitive advantages.
LEAD’s success factors
In 2014 we at LEAD decided to learn more about and better understand what signifies our most successful LEAD alumni – those who have become scalable growth businesses. When we went through the LEAD alumni’s business journeys a clear pattern became visible within five different areas. This became the foundation for LEAD’s success factor model, obviously, it is a generalization, but under each section there are 4 headlines unravelling the issues further.
All start-up projects are unique and have their own success factors, but we have noted that these specific parts often must be in place for the business to grow in a fast and secure way. Not having full capacity within a factor of the success factor model could partly be compensated by strengths within other areas.
If you find that the model and knowledge behind LEAD’s success factor model are interesting you can apply for our series of articles where we contribute with a general article about the model, followed by 20 articles – one for each success factor – describing each success factor in more detail and were we give some tips and tricks for improving the odds for your start-up.
- Relevant domain knowledge
2. Drive & leadership ability
3. Ability to prioritize / focus
4. Will, courage, and energy to address market issues and client contacts.
- Addressing significant market needs
2. Understanding the market’s value chains
3. Well-packaged offer focusing on creating value for the client
4. Network of contacts / knowledge of the market
- Clear commitment and a common vision
2. Complementing competences and a good division of roles
3. Efficient board with experienced external members
4. Owner engagement and understanding
- Early sales
2. Low burn rate
3. Control and foresight – governance
4. The right business character (scalable, high margin)
- Ability to create a brand and getting attention
2. Deducing potential which can be communicated to get financing and competence based on market understanding.
What kind of companies do we work with?
We are looking for you, who have an innovation or business idea where LEAD’s competence and creative environment can make a difference. No matter if your idea stems from research or from your own garage, we are interested if there is an ambition to realize the idea and build a successful business. The most important for us is that our efforts will be of great value for your business.
To be of as great value as possible and contribute to new innovative growth companies in the region the business ideas we work with need to have certain qualities.
A strong team – People are doing business and people are building companies. Who you are, the knowledge you have, and what you feel passionate about is essential to succeed in building a business. Is your drive strong enough? Do you have the right competence and opportunity to work in a timely and focused manner on your innovation?
The potential of the business idea – The more people you can solve a problem for and the more who are willing to pay for the solution, the larger the market potential is for the company. The potential needs to be large enough to build a growth business at an international market. The idea must be scalable – The product or service can be sold repeatedly with a minimal amount of supplemental work for each new client.
Protection – The more unique and difficult to copy your solution is, the stronger is the business you can build your company on. Your business model or other factors create enduring competitive advantages to competitors or future competitors.
That LEAD can be of value – Finally, that you believe that LEAD’s competence can be of value to your company and that you see the advantage of working in LEAD’s environment.