Trends For 2009 Via GigaOM: Business Models – Sink or Swim

GigaOM’s Om Malik yesterday posted “5 Trends That Will Separate the Strong From the Weak in 2009“, where he smartly outlines technology industry trends for 2009, instead of getting into the game of making New Year’s predictions (which for just about everybody invariably turn out out to be off the mark).

Here is the one I see as the most relevant for all businesses large or small:

Business models sink or swim. Several new business models have emerged this decade, among them VoIP, Social Networks and online video. But with a few exceptions, they haven’t been profitable. 2009 could be something of a crucible for them. Companies offering products or services for free will be tested as ad dollars remain scarce.

I would submit that this is very much true, and has been true for most small businesses even before the dislocations that 2008 brought us. Whether you are an entrepreneur just starting out, or already own a working business that you would like to grow with new products or services, (Profitability) Proof of Concept is EVERYTHING.

Many people, especially in the early phases of a new business (including many tech start-ups), concern themselves with a bunch of side-activities that I collectively call “playing business”: Things like getting stationary and business cards printed, building a brochure Website, hiring a lawyer to incorporate or file patents, etc. etc.

And the truth is, until you test your offer against the reality of your target market (if you’ve done your homework on identifying/selecting a detailed one), you have no business, and can dispense with just about all the formalities.

Pay-Per-Click (PPC) advertising through Google Adwords et al. has made it shockingly simple to market test, so that just about no one has any excuses left for not doing so (and the same goes for launching new products or services for an existing business). So why then is it that we tend to avoid going straight for the Proof of Concept first? The answer is simple: fear. We’d rather cling to a cherished illusion or dream, than find out the cold hard truth.

Fair enough, it’s understandable from a psychological perspective, but it is likely costing you and everybody else enormously in terms of the time and effort wasted on errant paths that should have been trimmed long ago, and in terms of failure to flexibly adjust to the realities of your market.

Here’s wishing us all the courage in 2009 to “Fail Fast”, that is to test fearlessly and up front. If you remember only one thing for all of 2009, make it these three little words: Proof of Concept.

Happy New Year!

– Alex Schleber