Concept Statement Guidelines
EXCERPT FROM ENTREPRENEURSHIP, BY DR. ALAN L. CARSRUD AND MALIN E. BRÄNNBACK. GREENWOOD PUBLISHING.
DEVELOPING THE CONCEPT
Developing a concept it is necessary to first clarify what the business is, that is, what the purpose is. According to one of the most influential thinkers in management, Peter Drucker, the purpose of a business is to create a customer. Drucker claimed this in 1954, half a century ago! Yet, this seems to be one of the hardest truths in business to get across. In other words, it is not profit, innovation, or total quality management. It is to create a costumer. Profitability is a necessary requirement, but not the purpose. With no customers, there will be no need to produce products, so no profit and no problems with creating shareholder value because there is NOTHING. So how does the firm create a costumer? Drucker answers, “through marketing and innovation.” When witting a business plan, what really takes place is a formalization process of the business concept of how to create a customer. The business concept is the business model that proves it is possible to create a market with effective demand, that there are customers willing to pay. A viable business model requires a sound revenue model, with one objective- to be profitable. Again, according to Drucker, profit is the test of the validity of the business model or the concept. More importantly, profit is a condition of survival, the cost of the future, the cost of staying in business. Business plans are not only written for founders and venture capitalists. Actually, we think it is first and foremost a tool for the entrepreneur as a means to clarify to himself or herself what the business is, should be, and will be. It is an analysis, organizing, and communication tool. Writing a business plan is a process that justifies the venture; it is a feasibility study and a blue print. The business plan and the process of developing the business concept...
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