In 2015, I had the pleasure of speaking to the MGT 459 Business Planning & Development class at Saginaw Valley State University. I did a rousing presentation taking ten of my previous blog posts and engaging the students in a discussion about how to brand themselves for the opportunities they want. Afterward, I got a sneak peek into their personal business plans for a startup that they want to launch. I gave advice and challenged their plans, and watched their ideas expand in just a short hour and a half. There was, however, one little thing that I noticed in almost all of their plans: they were too broad.
This isn’t a problem with college students lacking real world experience. In over a decade of helping startups, I have seen my fair share of business plans, and many suffer from trying to tackle too large a chunk of the market. Part of that is based on FOMO, or the “fear of missing out.” Entrepreneurs believe that if they segment their market to a small chunk, they’ll miss an opportunity. What they don’t understand is that by trying to hit too large of a target, they already are missing opportunity.
Over the past few years, marketing has gotten increasingly more personalized. Geofencing, mobile applications, email marketing, and social media have all made it possible for companies to know more about its customers, allowing them to create sales opportunities that feel like they were reading the mind of their customer, or at the least aware of their current needs. This is great for large businesses, that have the resources to collect such intimate information, but for a startup, it’s not nearly as possible. Startups, alternatively, have to do some leg work to find their target customer, and market only to them.
When building a business model, a startup needs to narrow their focus as far as they can. There are many resources explaining how to plan for your customer “persona,” but realistically, businesses need to build their plan based off the needs of just one person. The likelihood that more people need that same problem solved are huge, but if you cannot sell your idea to even one person, you cannot build a business.
Imagine you are at a shooting range. You can aim at five targets and hope to hit one, or you can aim at one target and likely hit one. Which is the better option? Building a business plan is this same mentality — if you aim too wide, you are likely to hit nothing at all. If you narrow your focus, you have the opportunity to learn more about your potential customer and how to market to them, which means that you can close the deal.
Remember these wise words (which you’ve likely seen before and will see many times again): If your startup does not make a sale, you don’t have a business, you have an expensive hobby.