You only need to understand three words to know why and how your business will work.
Value. Capture. Machine.
If you create a successful business, that is what you will have built. You will have made something that:
- Creates value for your customer, by making their lives better than they were before.
- Captures some of that value you created, as profit, to pay yourself and make sure…
- You do it again, and again, constantly improving your efficiency, raising your value and increasing your capture.
That’s it. Everything a business does is captured in those three words. Nothing lies outside.
Not only is this much simpler than a traditional business plan, it is also far superior.
It cuts right to the heart of what your business does and why it does it. The first words and first thoughts in this model are about the value your business creates. As Simon Sinek would say, it starts with “Why”.
It focuses on profitability, the heart of all successful businesses. Or it doesn’t, if what you want to capture is “eyeballs” or “social value”, you can model how you capture that too.
It is also dynamic. While a traditional business plan is a very long, overly detailed best-guess as to what the business might look like given certain assumptions, using the model of a Value Capture Machine assumes change. The key assumption is that “nothing goes according to plan”, so instead we build the need to change right into our model. Our plan is that our plan will change.
And, as we already said, it is much simpler, avoiding the need to learn how to draft and redraft a formal business plan, when what you should be learning is how to start your business.
It frees you up to focus on how you are…
- going to create value
- how are you capturing some of that value
- and how you keep doing that, improving on it, doing it bigger, better, for more people.
The things at the heart of a successful business: Value. Capture. Machine.
Start with these initial questions below, and then move on to understanding more about Value.