Through the months of June and July, Grad15 will be examining professional and career development opportunities for graduate students. This week, Wiley Larsen, program manager for the Graduate College's Office of Postdoctoral Affairs, introduced a four-step model for student entrepreneurs interested in marketing their research outside academia.
How to map out your business model
Larsen, who has managed and advised entrepreneurial start-ups for 15 years, encourages students to create and use a business model canvas to map out the business case for their start-up. Wiley recommends the Strategyzer template.
The Strategyzer Business Model Canvas contains nine key areas that entrepreneurs need to consider: customer segments, customer relationships, value propositions, key activities, key partners, key resources, channels, cost structures, and revenue streams.
The customer comes first
No matter what business model you use, it’s important to start by identifying your customer first. Successful ventures offer a solution to a problem a customer has. if you offer a solution to a problem nobody has, your entire business model falls apart.
Once you’ve identified your customer, you can move on to determine what your value proposition is. Value propositions can be hard to identify. Think of the value proposition as a numeric value or reason why the customer we identified would choose your solution over a competitor's. If you are proposing a start-up to provide rapid, reliable, affordable COVID-19 testing, for instance, your value proposition should be something like this: we detect coronavirus with 5 times better accuracy/at one-third the cost/in one-half the time as tests currently offered.
Learn what the customer needs
You might think you have a terrific idea, but you won’t know until you have tested your hypothesis and discussed the problem with potential customers.
That's why you have to talk to people. Ask open-ended questions about your general topic ('tell me about your current health concerns...') without leading them to a specific answer we want ('tell me what you would look for in a COVID-19 testing protocol'). If they don't bring up the area in which we've identified a potential problem in need of a solution, it might not actually be a problem.
Many potential ventures fail to get off the ground because we think we know what people need without talking to them. Many venture capitalists won't even consider a business proposal until we've talked to hundreds of potential customers.By the time you’ve talked to 20 or 30 potential customers, you should start to see a trend -- either your solution may be viable and worth further development, or it’s time to re-evaluate.. If you are in the ballpark and see a legitimate expression of need for your product or service, go ahead and proceed with the business model map. If aren’t in the ballpark, you have to ask yourself what these potential customers do need and decide if you have a solution for that need.
Now the real work begins
If you've made it this far -- you’ve identified a customer base, a value proposition and tapped into a genuine customer need for which you can provide a solution. Now the real work begins. Of all startups, fewer than 5% make it to the five-year mark.
Before you take the plunge, it's time for another round of questions leading up to the biggest question of all: go or no-go. Some things to ask yourself: is the need real? Can you win? Will it be worth it?
You might have a product that taps into a market, but you still need to consider the feasibility of what you’re proposing: is there already another solution out there, and are we needlessly reinventing the wheel? If so, can we out-compete the competition? Will the product actually make any money?
If your only value proposition is to sell something cheaper than your competition or to provide an alternative that produces a similar outcome, it's probably not worth pursuing.
However, if you've identified real customers, have a solid value proposition, and your initial market research indicates a legitimate need for your product and a feasible return on investment, you might have a chance. Use your business model canvas to help you fine-tune your product, identify your teams, build a bulletproof strategy, and -- with a little luck -- launch a successful entrepreneurial venture.
For more information on developing and implementing a business plan, register for Larson's free Entrepreneurship for Grad Students and Postdocs seminar series, running on five consecutive Tuesdays starting June 30. You can also follow Wiley on Twitter @wileylarsen or email him at email@example.com.
To download the slide deck from this week's Grad15 or access a recording of the webinar, visit the GradConnect Canvas site. Please note: if it's your first time visiting, you'll have to click 'enroll' at the link.See the full Grad15 summer schedule on the Graduate College website.