lessons journal

5 Lessons Learned About Developing Products and Finding a Market

Once a month, our panel of mentors answer your practical business questions. Send us your questions!

 

Dear BAM Mentor,

I’m developing a business plan for a BAM company. What are some ideas, tips or resources you would suggest as I conduct market research and analysis, especially in a BAM setting?

~ Anticipating Analysis

Dear Anticipating,

Start with “Why”

If I could ask you to understand anything about this, I would encourage you to understand the “why.” Motives determine outcome. If the company motives don’t line up with solid business principles, undergirded by correct biblical understanding; your hard work may never get past a good read by the intended audience. It could end up in a desk drawer. Or worse, it could alienate an entire culture, damaging years of relationship building. And please, whatever you do…don’t spiritualize motives. Just because we choose to spiritualize a motive does not justify it in God’s eyes. Nor does it guarantee successful execution. The sage advice of noted author and TED speaker Simon Sinek provides great clarity on the reason we want to start with the “why.”

Lesson Learned #1 – Ask lots of bad questions which lead to really good questions, and Google comes in handy at this point.

Get your Planning Head on Straight

Once you have clarity and understanding on the “why”, you are better equipped to move forward with the “what and how.” The “what and how” has everything to do with proper planning, researching, testing and… fingers-crossed… implementation. It’s important to know, as one mentor previously mentioned, when to set the planning aside to start testing assumptions.

Planning is a discipline in which we want to engage. It helps us foundationally understand what we need to do “good business.” More importantly, it establishes the right discipline for operating an ongoing concern. As a follower of Christ, I always use His entire Word as my life compass, particularly in business (Acts 20:27). I have learned, no matter how I may try to plan towards a specific end, because I am marked by Him, He will ultimately have His way (Isaiah 45).

For this reason, don’t hold too tightly to plans, because they will change: guaranteed. I have yet to see any business plans, including my own, which did not change (some radically) during execution. Or in my case before execution. Had we not tested our assumptions about how quickly our target customers would adopt a new technology solution, and instead moved forward in faith, we still would have failed, because our audience never got the faith memo. This is the reason why you will hear a business plan referred to as a “living document.” Therefore, make sure you only spend what is nominally required to test, before you implement. In my situation, the cost was time spent researching, time spent plan writing, time spent with random samples of my intended demographic, and a couple of long-distance trips to industry-specific conferences.

Lesson Learned #2 – Cost? The plan finished life in a desk drawer, plus a few pennies more. Savings? Priceless.

Theory Reflects Some Practice, But Not All

You could easily rephrase that to read well executed theory does not guarantee success. For every business principle, plan and approach, there are a host of “experts” who have their “tried and true” formula for how it is going to work. The very strong implication is, “Apply my theory (because ‘insert author name here’ did) and you will succeed. Many of the learned lessons are good. The challenge is, sometimes you just don’t know which are bad. That is, until you try it. That’s the very reason Amazon business book sales continue to be strong – you should see my Kindle!

Understand that often business theory or more appropriately “expert” advice is largely based on business case studies. How one person did it, and consequently sees it. This is why Jim Collins had to write a sequel to Good to Great. And then write a sequel to Great by Choice. And write a sequel to… you get my drift. If anything, his approach has been a great way to guarantee a sustainable income – and through that process he has learned to become a great business coach. It is also a good time to remember our Lord already reminded us of this fact in the Proverbs, where we are wisely advised to seek the counsel of many advisors (Proverbs 15:22).

Conventional business wisdom will teach that if you apply this framework or use that methodology, your opportunity for success will be greatly enhanced. The challenge, however, is you have your own unique circumstance and/or environmental influencers which define what, when, why and how you can bring a product or service to market. I don’t know about you, but my size 7-1/2 feet (ok..maybe size 8) have yet to fit into a size 5 shoe.

Lesson Learned #3 – Know your environment and understand that theory is good for the classroom, but the practical is required for the battleground. 

Get out of the Box

Think differently about who you are and who you represent before you go down this or any other road. You don’t have to do it like others if you trust that God is in this and through this, and serving as the foundation for this. He has told us that His power in us is already greater than any other power in the world (1 John 4:4). If he wants you there for such a time as this (and you really believe that) he will equip you, and bring the right assets including people, resources, permits, certifications, taxations etc. If you choose to compromise your ethic and integrity because that’s how business is done in your particular environment, then you need to ask the question, “Do I trust that this is what he has put in my heart for this place and time?” We know we are to render unto Caesar, we also know there is a moral line we do not cross because we are held to His standard.

If you do trust and have tested what God has put in your heart, then it’s time to ask another question, “Is there another way I should be looking at this?”  It means using that same power in you to figure out how to do this – differently. I call this thinking creatively. After all our boss is the author of creation, and creativity. All good business is designed to creatively solve a problem. What problem are you designing your business to solve? Uber was created as a response to the lack of access to affordable, clean, easily accessible, and ethical taxis, because the existing taxi companies refused to adapt to consumer demands over the years.

Step outside your current understanding of the paradigm you live in – let go of the box. Ask what is changing or has changed and how you can build a product or service to leverage the change? For example, cheap smart phones have proliferated the world, they are not going away. What can you do with that understanding?

Be creative about how you think about product implementation and pricing relative to what you know to be true about your culture and your potential customers. Are these people who are loyal to relationship? If they don’t have the finances to pay upfront, can you structure a payment system that is healthy for your business and manageable for the customer?

Be creative about how you think about your product or service relative to any other potential competitor. In business, one can never rest on his laurels, or the competition will eat their lunch. How easy is it for someone to copy you? How will you respond? Do you even need to respond? In telling the parable of the shrewd servant in Luke 16:1-20, Jesus openly wonders why His own people cannot seem to apply the same type of creative tactics of the soon-to-be unemployed servant in their own lives. Not for the purpose of deceit, like the servant, but because His people have been given so much more to accomplish the task. They just don’t know how – or refuse to use it!

Lesson Learned #4 – Tweak your mindset, just because you think it, it doesn’t make it so. While it pays to learn from the mistakes of others, you want to learn so you know what not to do.

Test Your Assumptions

Your thinking may be incorrect or incomplete. Understand through testing the market that your understanding may just be your misunderstanding. Likewise, you may think the potential business idea will never succeed in your context because, for example, no one in your setting has ever bought coffee before. And your thinking could be incomplete. You don’t know what will happen. That’s because no one has ever tried.

However, after you test your assumptions, you may still find you are questioning whether your idea will work or not. You may find after you make coffee for two weeks and give it to friends and strangers to try that no one in your town wants or is willing to pay for coffee. The reason may be no one in the town has developed a palate for coffee. Does this mean your idea won’t work? Not necessarily. It may mean it will take a long time for the business to be accepted and thrive. Then the question becomes: can your finances weather the palate change? If not, then you know where the desk drawer is located!

How do you test assumptions? You have to be creative. If your idea is for a small hotel, try your idea on a few travellers. Rent a bed or rent a room. Maybe a friend who writes a small travel blog would be willing to exchange a great write-up for you doing her laundry for a week! If your idea is more complicated, your creativity has to match.

Don’t think of how’s it currently being done, think of if how it could be done. Always make sure your model not only covers costs, but that it makes a profit. Are you in business for long term sustainability? Then you have to charge accordingly. Make sure you have done the math, or your short-sightedness may be your demise.

When testing assumptions, think creatively about your existing assets. What can be re-purposed? What can be dual-purposed? I’m currently advising a small Brazilian national ministry that works in the favelas of Sáo Paulo, Brazil. The goal was to begin small business to help build economic sustainability into the ministry and to create jobs. When we began two years ago several ideas were floated: a bakery, a coffee shop, a car detailing business. When I kept suggesting they keep it simple and begin with the “lowest hanging fruit” did they finally arrive at the best business for their context, assets, skills and finances. For them it was a fee-based English school targeting Brazilian business people. In applying their assets and skills to solve the problem, almost all have been dual-purposed. That is because they are first running as a pilot project at “bare-bones” expenses. They use teachers from their existing paid staff (dual-purpose). The teachers are paid from the school budget. They use classroom space from their existing ministry center (dual-purpose). They are using visitors from America to help teach immersion classes (re-purpose), and so on. The ongoing pilot project has uncovered a lot of growth opportunities, not for the purpose of defeat, but rather for the purpose of re-tweaking and re-testing. And through this process, there has been a lot of growth at the individual level. What better way to learn the hard lessons? 

Lesson Learned #5 – You don’t know what you don’t know, until you try. Then you fail, revise and try again.

 

One who watches the wind will not sow, and the one who looks at the clouds will not reap. Just as you don’t know the path of the wind, or how bones develop in the womb of a pregnant woman, so you don’t know the work of God who makes everything. In the morning sow your seed, and at evening do not let your hand rest, because you don’t know which will succeed, whether one or the other, or if both of them will be equally good. Ecclesiastes 11:4-6 HCSB

 

~ Colleene Isaacs

 

More Responses on this topic:

From Mike Baer:

The question of market research comes up constantly and is both a very important part of a business plan and at the same time can be a big waste of time. Let me explain.

If you are doing a business plan to guide your launch and actions, then all you really need is to figure out a few basic things:

1. Who else does what you plan to do?

2. In what ways are you better, faster, cheaper, easier to access, etc.?

3. What price point will your potential customers accept? What do your competitors charge?

4. Where, how, when will you distribute your product/service? Does it fit with where, how, when people want to buy?

5. How many potential customers are there? How many of them will you be able to convert into actual customers?

6. What laws, taxes, licenses, etc. exist that will affect your business?

Beyond these few things much more research will not give you ROI. So don’t do it. [Read More…]

 

From Robert Andrews:

The basic idea of a business plan is to help you think through all of the different issues that will make a strategic difference to your proposed business. There are literally hundreds of issues to think about and that can be daunting. The business plan helps you structure your thoughts, assess the risks and opportunities and, perhaps most significantly, helps you see what you still need to research and learn.

 I’ll try to address some of the most significant issues for a cross-cultural BAM startup.

 Almost everything in a business starts with the market: 

  • Are the people out there who need your product or service?
  • Are those people able to pay?
  • Are they willing to buy it?
  • After they buy it will they pay for it?

Many have gotten enticed by a significant market need and missed the fact that the customers they identified don’t have the resources to pay (think third world wheelchair users) or aren’t willing to pay because they don’t see the need that is so obvious to you. [Read More…]

Meet the ‘Ask a BAM Mentor’ panel of mentors Submit a Question to the mentors panel via the Contact page, select ‘Ask a BAM Mentor – submit question’ as the subject.