In search of a feasible business
Is this idea feasible? This is the main question I needed to answer for Project Neo, and its been a bit of a rough ride.
While a business plan gives you lots of waffle about the idea, markets, competitors, funding, etc , the only way to find out if your idea is feasible is to try putting numbers to it [fitting the business model]. And when you do so, the first thing you quickly learn is:
You don’t know that you don’t know what you don’t know!
[I had to read that about ten times when I first saw it before I came close to getting it]
What I mean is – there is a lot that we don’t know, we just don’t realise that we don’t know it.
Putting the model together sounds simple enough at first. Jot down what you think you’ll spend to get the business up and running, then find out how much money you need to make to cover the costs and make a nice profit.
But the challenge starts when you actually think through it. And I’ve learned a lot through this process.
I’ve been working on the Project Neo business model for a couple of months now [or rather, fighting with it] and finally have some success to show! Woohoo!
Here’s a quick rundown of how it’s played out so far:
Began with an excel business model I put together years ago for something else- Filled in [what I thought were] the main assumptions - model looked good and profitable within two years.
- Did some research on costs – adjusted model. Looking a bit worse, still okay.
- Found errors in a few calculations – adjusted model. Looking even worse, but I can live with it.
- Discovered a flaw in my assumptions – adjusted the model. Perhaps I should just call it quits now!?
- Thought about major causes of the forecast losses. Discovered some key assumptions I hadn’t considered.
- Eventually found some relatively simple ways to reduce negative impact of key assumptions. Painful but good process!
- Adjusted model, tweaked a few of the other assumptions. Business now looking viable and much more realistic!
- Stopped there otherwise I’ll spend all my time on this, and there’s a lot more to be done. Sweet!
Some of the main learnings:
- Freemium is two-sided. The “free” part can kill you. Consider whether you’ll earn enough to give away the rest.
- The model consists of assumptions and facts. Make sure you can differentiate between the two.
- If you’re heading into uncharted territory, the assumptions will most likely outweigh the facts. By a fair bit.
- Find and collaborate the facts – be able to count on them.
- For the assumptions, find some real comparisons that help you to understand how realistic the assumptions actually are. Important to understand the main risks in your model!
I will still have to do a few things with the model [running scenarios being part of that - I'll get into that later] but for now I’m moving on. Next on the list is finding someone suitable I can bounce this off. That’ll also be part of the Enablis story, I’m sure, so there’s bound to be some good [even if not nice] feedback there.
In the meantime hoping to get started on some of the more creative elements [logo, site design and some of the development, I hope - hold thumbs please!!]
Keep moving forward!
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