Discussion

13 Finding, Evaluating, and Processing Information LEARNING OBJECTIVES

After studying this chapter, you will be able to

1 Describe an effective process for conducting business research.

2 Define secondary research, and explain how to evaluate, locate, and document information sources.

3 Define primary research, and outline the steps involved in conducting surveys and interviews.

4 Describe the major tasks involved in processing research results.

5 Explain how to summarize research results and present conclusions and recommendations.

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Whenever you’re gathering information for a major business writing project, you’re likely to encounter the question of how much is enough? Collecting and processing information takes time and often costs money, and it’s not always clear how much information you need in order to craft an effective report or proposal, or how much time and money you should invest to get it. Invest too little and you risk writing a flawed report. Invest too much and you’ll waste time and money that would be better put to other uses.

Business plans are a great example of this dilemma, and they have a special twist that makes information collection even more challenging. As you’ll read on page 396 in Chapter 14, conventional business plan covers a lot of territory, from a high-level look at strategy to details on financing, operations, marketing, and other functional areas. These reports can run to 20, 30, 40 pages or more, and you can spend weeks gathering the necessary information and distilling it down to useful formats.

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Author and entrepreneur Alex Osterwalder’s approach to evaluating new business ideas offers a simpler, faster alternative than the traditional business plan.

Courtesy of Alex Osterwalder

Spending that much time on research before writing the business plan and launching the company can seem like a good idea to entrepreneurs who want to reduce start-up risks as much as possible or who want to produce high-quality reports to impress lenders or investors. In many start-up situations, however, this is precious time that entrepreneurs should be spending getting a product in front of customers to test the viability of the business concept, rather than crafting an impressive-looking plan about an idea that is still unproven. Moreover, in fast-moving markets, it is possible to spend so much time researching and writing the business plan that the target market changes by the time the plan is ready.

The special twist with business plans involves the uncertainty surrounding some of the most important information they typically contain. For example, estimating demand for a new product or service is one of the most vital aspects of planning a business—and one of the most difficult. You might spend weeks or months gathering data on comparable products and refining spreadsheets with elegant forecasting models to predict how many products you can sell and how much profit you’ll make. This projection will then be the basis of almost everything else in the business plan, from the amount of money you can attract from investors to the number of employees you should hire.

Here’s the catch: You could spend all this time writing a plan and launching a business based on this number only to find out it’s wildly off the mark. In the worst case scenario, you might’ve wasted months launching a weak business idea or a product with little or no market appeal. Even the most sophisticated estimates of market demand are still only predictions, and the only way to really know if a product is going to sell is to get it in front of customers and ask them to buy it.

In response to these uncertainties with conventional business plans, some experts now recommend a simplified, accelerated approach that gets a new business to the “point of proof” faster. One of the key thinkers behind this new approach is the Swiss author and entrepreneur Alex Osterwalder. Rather than launching businesses with elaborate planning and a conventional business plan, he proposes that companies use the Business Model Canvas. This single-sheet visual brainstorming tool helps entrepreneurs answer a handful of key questions to determine whether they have a financially viable business concept—and what to adjust if they don’t. The canvas approach helps flag some of the common stumbling points of new businesses, including financial plans that are based on shaky assumptions (or outright fantasy) and untested hypotheses about market behavior.

The Business Model Canvas and its variants don’t necessarily replace conventional business reports in all cases, and they don’t cover all the details needed to operate a business after launch, but they help entrepreneurs decide whether it makes sense to move forward. By developing and testing business concepts quickly, entrepreneurs can find out whether they have a realistic idea before investing weeks of time in detailed planning and report-writing efforts. The canvas idea has definitely captured the imagination of entrepreneurs: More than a million people bought the book that first outlined the canvas idea, and more than 5 million have downloaded the Business Model Canvas.1