Idea Assessment and Business Development
An important aspect of successful business
development is to follow a process of how you will assess a business idea
or concepts (project), decide whether to move forward with the project and
build a business if it is decided to move forward. The five steps below
help outline a simple process you can follow. The steps are not a rigid
structure to follow. Rather they identify issues you need to address and
when to address them.
If you do not follow a
process, you will find yourself going in circles and revisiting the same
issues over and over without making progress. In addition to wasting time,
the frustration may cause you to make poor decisions that can haunt you
Following the steps above does not
guarantee business success. However, it can greatly increase your chances
Step 1 - Initial Idea Exploration, Identification and Assessment
The origination of a new
business idea can come from a variety of sources. It may come from the
board room of an existing business or a group of producers sitting around
the kitchen table. Regardless of the setting, you may want to use the
following approach to formulate the business concept. Anytime during steps
1 and 2 you may decide that your idea is not viable, in which case you may
want to abandon the idea.
- Form a project committee
- Creating a good project committee involves bringing together
individuals who have the business development skills needed to
investigate the idea/concept and carry through with business formation
if the concept is viable.
- Formulate general business
idea(s) or concept(s) - Define your business idea/concept and
describe why it has merit. Your idea may involve filling an unmet need
in the marketplace with a new product, providing an existing product in
a new form, producing a product better or cheaper than competitors, or
other ways in which value can be added. Remember, an idea is only
viable if people are willing to pay you for what it provides. For
example, a premium product is only viable if someone is willing to pay
more for it.
- Identify alternative business
models or scenarios for the idea(s) - A business model
describes how the business will function in producing the product or
service and providing it to the customer. A business scenario is a
logical assemblage of the essential business elements starting with raw
materials procurement and ending with the sale of the final product, and
all the stages in between.
- Investigate idea/concept and
alternative business scenarios - Conduct an initial informal
investigation of the validity of your idea. Investigate the scenarios
or models. Early in the process this may be nothing more than a series
of telephone calls to knowledgeable individuals. Does your idea make
sense? Identify business scenarios/models for further study and
eliminate those that are not viable.
- Formal investigation -
You may want to conduct a formal assessment such as a pre-feasibility
study or a marketing study of the idea and various scenarios or models.
This may involve using consultants to investigate various aspects of the
project. It may involve eliminating additional scenarios/models or
identifying new ones.
- Further refine scenarios
- Select those scenarios that are viable for further study and eliminate
the rest. As you go through Step 1 you should accomplish two things:
- Through the process of elimination
you will reduce the number of scenarios/models under consideration for
- Refine and flesh-out the remaining
Step 2 - Idea/Concept and Scenario/Model Deliberation and
- Further refine the business
scenarios/models - If you have conducted any of the formal
assessments described above, you have information that can be used to
further refine your business scenario/models. So by now you should have
refined your idea to one or a small number of specific and detailed
business scenario/models that you want to assess. This is critical
before you move to the next step.
- Conduct feasibility study
- A feasibility study will provide a comprehensive and detailed
assessment of the market, operational, technical, managerial and
financial aspects of your business project. These factors will feed into
the economic assessment of your project (is it profitable?). If you have
already conducted a pre-feasibility study, marketing study or other
study; these materials can be used in the feasibility study. Feasibility
studies are usually prepared by consultants, so you will need to
investigate consultants who are familiar with your type of business and
experienced in preparing feasibility studies.
- Analyze the feasibility study
- When you receive the feasibility report, the first step is not to
begin deliberations on whether to progress with the project. Rather,
you need to determine the completeness and accuracy of the study. Does
it address the issues you want addressed? Was there a thorough
investigation of the critical issues? Challenge the assumptions and
conclusions of the study. Only after you have accepted the study as
being complete and comprehensive can you move to Step 3.
- Further refine the idea and
scenario/model - However, before you proceed you may see the
need for further study of various aspects of the business project. It
is not uncommon for the feasibility study to uncover new issues that
need to be investigated. This may create the need for additional
negotiations with your consultants to expand on the original scope of
the feasibility study.
Step 3 - Go/No-Go Decision
This is the most critical
step in the entire business development process. In a sense it is the
point of no return. Once you start down the path of creating a business,
it is difficult to turn back. If you have unresolved doubts or
reservations about the project, you should not proceed. That is why it is
important to have an open, honest and thorough discussion when making this
You may find that there is
division in your committee. Some members may want to move forward while
others may want to end it. This is not uncommon. Each needs to take an
honest look at the other side's arguments. If the issues cannot be
resolved, each side needs to go its own way with no bad feelings. At this
point the remaining members need to determine if they want to proceed with
Commitment to the project is
another important factor to consider before you proceed. Most beginners to
business development greatly underestimate the time and effort required to
start a business. A financial commitment by project members at this time
(everyone throws some money in the pot) is an important sign of commitment
to creating the business.
This step involves making one
of the three possible decisions listed below:
- Decide that the project is viable and
move forward with it.
- Decide to do more study and or analyze
- Decide that the project is not viable
and abandon it.
Step 4 - Business Plan Preparation and Implementation
If you decide to proceed with
creating a business, you will need to prepare a business plan. A business
plan is an outline or blueprint of how you will create your business. If
you conducted a feasibility study, it will provide some of the information
needed for your business plan. Also, business planning often involves the
use of consultants. However, don't turn the process completely over to a
consultant, you need to stay integrally involved in the planning process.
Remember, it is your business.
Although planning can involve
considerable time and effort, it is the easiest part. Implementing the
plan is much more difficult. Many prospective businesses experience
problems or failure due to the improper implementation of their business
plan. This step requires commitment and dedication. Unforeseen problems
will emerge. Your persistence is critical.
Implementing your business
plan will include, but is not limited to:
- Creating a legal structure
- Securing market access
- Raising equity and securing financing
- Hiring management/staff
- Constructing facility
Step 5 - Business Operations
Now that you have successfully started
your value-added business, your work has just begun. Producer groups often
forget that once the business is created, it takes constant attention for
it to remain healthy and viable.
Operating a business is very different
than starting a business. It requires a different set of skills. So the
people who create the business may not be the best people to manage the
These are the
five steps you will want to follow for taking an idea and making a viable
business from it. These steps will not guarantee success. However, they
will increase your odds of success. Also, you will make more efficient
use of your time.