In many of the start-ups I’ve seen and been working with while mentoring, the companies have been focusing on building and developing their product, and then sorting out their product strategy. Since, for many of these start-ups, this is their first foray into business and product ownership, they tend to focus on getting the product built (which is not an unreasonable investment of time), and neglecting the overarching business objectives and operations planning to get there.
The difference between a business strategy and a product strategy is that a business strategy lays out your business operations objectives, customer acquisition plan and metrics for measurement; whereas product strategy outlines what will get built and how the product will be positioned to achieve the business objectives.
Thinking about how to create a business around a product can be challenging, but if the product is well defined enough, you can reverse engineer the process. This is exactly how I’m approaching it with the companies I’m mentoring; the start-ups have the defined product and an idea of the needs it will fill, and from there, we work out the additional pieces and begin to look at the overarching business strategy model.
A business strategy should:
1. Identify who the customers are and what they need
2. Define the product(s)
3. Include a sales, marketing, and communications plan
4. Forecast financial/revenue targets over time
5. Determine the equipment, staff and operations costs required to meet the growth projections
From here, we can overlay the product pricing model to see when revenue will turn into profit. Regardless of whether or not a company is going for funding (though most seem to be), it’s important to review all the pieces together, as it also allows for identifying areas where there might be gaps or too broad of an approach.
Running a business is more than simply selling a product. It takes identifying and understanding of all the supporting pieces needed to get your product out the door.
What other items would you add to a business strategy?