What is a Business Concept?
A business concept is a statement that describes the reach and reason of existence of a given business idea. In other words, it sums up the crucial elements that define the business.
A business concept is a full, well-thought out construct of all of the key items required to build a profitable business, including overall offering, specific products/services (at least to start out), who would pay for that product/service, how the product would be delivered to the target audiences, and why the concept is unique enough to succeed.
An idea for a business that includes basic information such as the service or product, the target demographic, and a unique selling proposition that gives a company an advantage over competitors. A business concept may involve a new product or simply a novel approach to marketing or delivering an existing product. Once a concept is developed, it is incorporated into a business plan.
What Does Business Concept Mean?
A concise definition of what a business concept is varies from author to author. The reason for this is that describing a business is never a formula. There are different ways to communicate what a business do and why it exists. Nevertheless, there are some key elements that must be explained by a business concept for it to be considered useful and informative. First of all, the product or service being offered must be easily understood.
This means that whatever the company is offering must be clearly communicated through the business concept. On the other hand, the target market should also be mentioned in this concept. This market will be the segment that the business is looking to serve.
Finally, the company’s overall competitive advantage should conclude the statement, to describe how this proposal differs from what already exists. Business concepts are employed regularly in the business world, most commonly to present new business ideas to potential investors and also as institutional information displayed to the public to transmit the essential qualities and elements behind a given business.
What is a Business Concept Statement?
Think of your Business Concept Statement as a tool that distills your voluminous business plan into a handy one- or two-page document. Not only does it lay the groundwork for the business plan to come, it also refines your idea, outlines the consumer problem it aims to solve, and discusses how the idea will fit into the overall market. It’s a snackable snapshot you can share with investors, lenders, and/or future partners.
What Should a Business Concept Statement Include?
While brevity is the hallmark of a solid Business Concepts Statement, it should still encompass some key elements and provide a thoughtful analysis of your idea, a glimpse of the existing market, and a value proposition that distinguishes you from the rest of the market.
- A Brief Description of the Business Concept. This doesn’t have to be more than a sentence or two that captures the essence of your product or service.
- The Market Need. Identify the void in the marketplace that your business idea is going to fill. This could be a problem your product or service will solve, an emerging market your product will help to define, or the absence of a product or service that people don’t even know they need.
- Your Solution. This is a more in-depth discussion of how your business idea is going to fill the void, solve the problem, or create a new market. It’s also your chance to discuss why your product or service is the answer and, more specifically, why YOU are the perfect person to bring the idea to market.
- Your Proposed Business Model. This is a critical component for every stakeholder involved because this is the element of the Business Concept Statement that details how you are going to make money. You’ll want to discuss how you’re going to charge for your product or service, the business processes you plan to implement, and the resources you’ll need to make it a success.
- Your Unique Value Proposition (UVP). Explain how your product or service is different from others in the marketplace. Identify why someone would want to buy your product instead of one that’s already on the market. Your UVP is your differentiator—the reason your business will exist. Will it be your unparalleled customer service? A new technology? A higher-quality product? Better price points? Faster delivery? Or a combination of those things? Even something as simple as more attractive packaging can make all the difference for many consumers.
- A Succinct Competitive Analysis. To be absolutely sure your new business idea will fill a hole in the market, you’ll need to look at your potential competition. Who else is currently providing products or services to your prospective customers? What are their strengths and weaknesses? Examine the competition’s annual revenue (or estimate it if you have to) and identify their market share. This will help you determine both the size of the market and its potential for disruption, innovation, or new products or services.
- A Quick Overview of Your Marketing Plan. How you market your business will be critical to its success. In some cases, your marketing plan may actually be your UVP. Establish buyer personas, develop a target audience, and assess and prioritize your ideal marketing verticals. Then, discuss how you plan to promote your business idea in a way that’s different from your competitors.
Once you’ve finished developing your Business Concept Statement, you’ll have a useful tool to pursue business partners, investors, lenders, advisors, mentors, peers and even future employees.