19 November, 2013

1-1-19 value creation: The CIAs

Some ideas are awesome, but may be impossible to implement the way we imagine it, simply because they would be extremely expensive that no one could afford it, or they would take extremely long time, or need too much effort that seems impossible to compensate for, or may be need a future technology that doesn't exist yet, or just can't be produced on large scale that can make it profitable ….. or for any other reason

So, you need to test any idea you have before going for it and explore how turn it to business
The questions you must ask yourself, the questions you need to validate to make this idea a real business chance; are called "Critically Important Assumptions"

The things that need to be "TRUE" in order for your business to work
-         These questions almost are related to financial decisions
-         No specific questions across all businesses, you need to figure out your own idea-related-CIAs
Here is a question to start with:
-         Is the amount of money you need to keep the business going on + personal profit-margin <= the amount of money your no. customers are willing to pay over a specific time range
Here you need to know 4 things:
-         How much do you need from the business?
-         How much are the customers willing to pay?
-         How many customers are needed?
-         For how long are they gonna stay paying you?
This is an example of a CIA, if the answer of it is "NO", the business can't be successful and you need to look for another idea

Part of the planning is to determine and validate all the "critically important assumptions" before making any further step toward converting the idea to a business

The more clearly you define these CIAs, the quicker you can test and validate your idea