The article Knowing a Winning Business Idea has provided me with many good thoughts on my own venture idea. When I read it through, I kept using the questions posed in the article to evaluate my concept and how to make the idea itself and its feasibility sounder.
The first tool is to determine ways to provide exceptional utility for consumers. It can create new utility experience among the six buyer experience cycle, and/or tap into one of the six utility levers. For my venture concept, providing free health insurance for the uninsured, works for the benefit of the poor and uninsured people. However, it also needs donations from the wealthier general public. Thus, I need to provide utility for both the uninsured and donors. For my venture’s target, the offer of free insurance helps them in the Purchase experience by giving them something that used to be too dear to have, and it increases their productivity to improve quality of life on other aspects. For donors, I need to convince them the significance and benefit of donating money for this purpose. There’s tax deduction benefit on the one hand, and on the other, with more people having insurance, more quality hospital resources can be provided for all. These messages should be delivered in a simple and straightforward way. One way to make the process of donation convenient for them is that they can give a check or vouch alike to doctors that they see. They do not need to hassle through the website or mailings if they are busy.
A second tool is to set a strategic price. The point of my venture is not to attract existing consumers who have insurances, but to expand the market to those who cannot afford it. It is a challenge for my venture, as the beneficiaries of the venture do not pay for the benefit, and those pay for the product do not enjoy the benefit directly. Thus I need to do more research on how to set the price. For the insured, there should not be a problem to attract them if offering free insurances. However, if feasibility in soliciting donations from the public does not sound good, then some proportion of insurance need to be shared by the uninsured. Thus I need to find out the price range that they can bear. Insurance companies on average earn $98 per policy. If my venture can bargain a fairer price for the uninsured, there will be more people helped, and less pressure in raising money. For the donors, I need to attract big contributors such as foundations and governments. The average donation made by individuals was slightly over $3 last year, which was not so much promising.
Another tool is to build a profitable business model. To support my venture, I need to draw into either commission if any from insurance companies, or from donations. A percentage has to be determined. Whether it is 2% or 5%, I have to prove that such amount is able to support the venture, and not too much to drive revenues away. For now I prefer to draw from insurance companies, if my venture is able to bring them in. One way is to find companies/organizations that do insurance business and agree upon a lower profit margin. It is meant to build a partnership with insurance companies that are willing to help the insured.
One thing that puzzled me a little is the dilemma of hitting a large number of consumers quickly and being patient to start small. This article talks about two reasons why it is important to reach a high volume of consumers quickly. However, we also see arguments of concentrating efforts and starting from a small scale. If starting small, it is easier to test the market and make the venture work. However, in this way, it is hard to reach a lot of consumers, especially when there is geographical constraint. When a big competitor senses the opportunity, it may seize it and expand it in the big market.
How shall we balance it?
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