Before investing in a new retail idea, formulate the customer’s problem, describe the offer, and estimate preliminary costs. Set a resource limit and decision criteria in advance: continue preparing, revise the model, or defer the investment.
Prepare a description of the idea and a preliminary estimate of resources and costs. Planning alone does not confirm demand or profitability.
Formulate the customer’s problem as a hypothesis
Start developing the business idea with the problem it is meant to solve. Write one sentence: “I assume that certain customers need a specific product for a particular task.” Clarify the use situation and the expected benefit.
For example: “I assume that people with a small closet need organizers to keep small items in order.” Use this hypothesis as the basis for describing the idea.
Review available product descriptions, specifications, and published offer terms. Record where each parameter came from and when you reviewed the information. At this stage, limit yourself to public materials without collecting contact details or personal questionnaires.
List the business model assumptions
Customers, resources, channels, value proposition, revenue, and costs are business model risk areas that need checking. At the preliminary assessment stage, record them separately. For each assumption, note what is already known and what remains unclear.
| Component | What to record for the assessment |
|---|---|
| Customer and task | Who the product is for, in what situation it would be used, and what problem it is meant to solve. |
| Offer | A tentative list of products, specifications, price, and expected benefit. |
| Channel | Where the offer might be presented and what resources that format would require. Keep this as a paper description. |
| Resources | Available funds, time, skills, equipment, and storage space. Note what is missing. |
| Revenue | Assumptions about price. Leave future sales volume and receipts undetermined. |
| Costs | A list of one-time and ongoing costs, known amounts, and items not yet estimated. |
Prepare a paper or visual description of the offer
Create a product card sketch or a one-page description. Include purpose, dimensions, material, contents, and a tentative price—only the parameters needed for your model. Mark unknown specifications clearly.
Add anticipated fulfillment terms as assumptions. Use the sketch to describe the idea and estimate costs. Review the description: is it clear what task the product is meant to perform, and does it avoid promises that lack support?
Calculate the costs included and mark what is unknown
Startup costs include one-time and ongoing expenses. Make two lists: one-time preparation costs and recurring payments for the anticipated format. Specify the calculation period for ongoing costs. Leave any item without an amount marked as undetermined in the estimate instead of treating it as zero.
Review available information about prices and supply terms without placing an order. Record the minimum quantity, delivery time, and any other available terms. Mark any terms without available data as needing clarification.
Hypothetical example: an estimate for organizers
Use organizers as an example for a preliminary cost estimate. All figures below are hypothetical.
- Quantity used in the calculation — 30 units.
- Hypothetical unit price — UAH 200: 30 × 200 = UAH 6,000.
- Hypothetical delivery cost included — UAH 500.
- Hypothetical packaging materials included — UAH 300.
- Other costs included: 500 + 300 = UAH 800.
- Total for the listed items: 6,000 + 800 = UAH 6,800.
Add separate items for storage space, equipment, the chosen channel, recurring payments, and the owner’s time to the preliminary estimate of UAH 6,800. Determine these amounts based on supply terms and the resources needed.
Suppose the resource limit for this model is UAH 6,500. The included amount exceeds it by UAH 300. By this criterion, the owner revises the model or defers the investment. If the hypothetical limit is UAH 7,500, UAH 700 remains after the included items. Compare this UAH 700 with costs whose amounts still need clarification before making an investment decision.
Record the decision and the time allowed to prepare the assessment
Set a deadline for completing the description and estimate, for example, five working days. Before it ends, review every assumption: what is supported, what conflicts with the information found, and what remains unclear.
Record the decision along with the reason. If included costs exceed the limit, revise the model. If significant costs or required resources are unknown, defer the investment until they are clarified. If the description and estimate are complete, identify the next question to work through separately.
Go back to the previous step