The Perfect Fit

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The Perfect Fit

Castillo Holley's model of Meaningful firmsThis is an excerpt from my book How to Fund your Million Dollar Idea… it gives a fool proof model for developing high-impact firms.

The Castillo Holley’s model includes a series of iterations between market-team, resources-team, and funding-team.

To use the model, always start by analyzing the market, identifying the answers to three strategic questions:

  • Who is the client?
  • What are their specific needs?
  • How much are they prepared to pay and when will they pay?

The market information also needs to identify solutions available to customers, such as competitors and substitutes. The responses to the market’s questions set the foundations for REVENUES.

Once the market has been identified, the next step is to find out how the company will meet the price expected from clients and still make a profit. This is the area of operations. To develop each offer, entrepreneurs must consider the costs of design, production, and delivery. Entrepreneurs then engage in a series of interactive analyses, creatively finding ways to reduce and even eliminate costs. Thinking about how products or services will be created and delivered sets the foundation for the cost evaluation and the selection of the management team. The responses to the market’s questions set the foundations for EXPENSES.

Some members of the management team will already be founders; others managers will need to be hired. With regards to the management team, it is critical to define who will be accountable for the following functions: sales and marketing (market pillar); production and purchasing (operations pillar); and accounting and administration (funding pillar). These functions are overseen by people highly committed to the success of the firm. In fact, this is how the ‘team’ is defined: who is accountable for making things ‘happen.’

The operations area defines costs, identifying answers to these questions:

  • What is the mechanism used to reach out to customers and how much does it cost?
  • How are the offers produced and how much do they cost?
  • Where is the management expertise that supports these assumptions?
  • What expertise and contacts does each individual team member brings to the company?
  • Who are the suppliers needed by the company.
  • What are the delivery and after-sales support mechanisms and how much do they cost?

After defining the basis for revenues and costs, the last area to develop is funding. Using the information from the market and operations simplifies the creation of financial statements and the definition of the extent and timing of required investment.

The planning stage ends with the completion of a business plan, a document that serves as a communication tool for various stakeholders. The main difference between a strategic plan and a business plan is the team. In the business plan, the management team is critical. In the strategic plan, a team managing the process can be replaced by others with similar background because there is a system in place.

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By |May 31st, 2013|Categories: Blog|1 Comment

About the Author:

Alicia Castillo Holley is an international speaker and researcher on innovation, entrepreneurship, and venture capital.

One Comment

  1. Emma May 13, 2014 at 4:17 pm

    Your book “How to fund your Million dollar idea” sounds very helpful to anyone wanting to start a business. I will certainly be thinking of reading it. I noticed it is on a status over on your Facebook page.
    Great Facebook page by the way and I will like that also. I don’t close doors on free and helpful advice and am glad to have found you.

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