A business concept is simply a short, clear statement of your business opportunity which contains five important elements:
- Who will buy?
- Value proposition
- The product or service itself
- The distribution channel
- The business concept statement
Let’s look at the first component: the question Who Will Buy?
It takes more than a good product or service to make a business successful. It takes customers! But many entrepreneurs can’t describe their customers. Generally, your customers might be other businesses (a business to business market, or B2B market) or your customers might be consumers (a business to consumer, or B2C market). Your customers might even be both.
Sometimes your customer isn’t the person or business who will actually use your product or service. This is why it’s important for you to know both your customers and the end users of your products or services. Let’s say you want to import antique furniture. You buy your antiques, import them into the country, and sell them to local dealers who then sell them to the public. So the antique dealer is your customer, and the consumer (or end user) is the one who buys the 19th-century writing desk and shows it off to their friends. You might have to convince the antique dealer that there’s a market out there for your finds. When you understand who will buy and who will use, you’ll have a better understanding of your business’ chances of success.
Defining your target customer is a very important step in creating your business concept. A clear understanding of who will buy your product will help you figure out the value you’re adding, or the problem you’re solving for your customer.