Welcome to the second part in our Starting a Business series. You can find the first part of the series here.
This week we’re going to look at one of the most anxiety-inducing steps in starting a business – testing whether your idea is good enough.
It’s natural to be protective of your idea – especially if you’ve attached big hopes to it – but even the best idea is useless stuck in your head. Now is the time to gather up your courage and push your idea out into the unforgiving light of day.
Write Down your Business Idea
If your idea has been trapped inside your head, this is the place to start.
You don’t have to write out a fully-fledged business plan, just spend an evening writing, sketching and brainstorming your idea. A great way to frame and focus this exercise is to make it your goal to create a short elevator pitch to coherently communicate your business idea to others. If you can achieve that then you’re well on your way.
Writing something down changes the way you think about it. It allows you to ‘join up’ your thinking. You’d be surprised at how many new possibilities arise when you start to get things down on paper. This is also the moment when the gaps, incongruities and contradictions are most likely to come to the surface.
How’s your idea looking now?
The ideal outcome of this exercise is that you feel more confident in your idea and eager to share it with others.
Does Your Idea Solve A Common Problem?
Before you head off to pitch unsuspecting passersby now is a good time to read over your idea in the cold light of day and assess it honestly and dispassionately. The question you need to ask yourself is the following:
Is this an appealing solution to a common problem?
Let’s start with the ‘common problem’. This doesn’t necessarily refer to a problem that everyone has (but good for you if that’s the case). It could be a problem suffered by a particular profession or industry, a specific need of fans of a particular hobby or interest, or a common need in a particular locality.
Now on to the ‘appealing solution’. Hopefully you’ve identified a common problem but you also need to consider how well your idea addresses it. Will people see the value of your idea as a solution to the problem? Can you produce your solution at a price point that your target customers would be willing to meet and that won’t be prohibitively expensive for you to set up?
There are a lot of questions to consider here. This is the point where you need to get out there and start talking to potential customers and doing in-depth market research.
Will People Pay For Your Business Idea?
It’s absolutely important to talk over your idea with the people you trust – friends, family, colleagues – but at some point you’re going to have to address the market directly.
There’s no better way to prove the validity of your business idea than establishing that potential customers are willing to pay for it.
It could be as simple as explaining your idea and asking the question:
Is this something you’d pay for?
That’s a great start and the answers you get will be much more telling than if you simply ask whether people like the idea, especially if you’re asking the question of people who know you.
If your idea relates to a particular interest or hobby, visit the most popular online forums, outline your business idea and ask the question. If your idea relates to a particular industry, call your contacts and pitch your idea as if it was a finished product – whatever you need to do to get as genuine an answer as possible to the most fundamental question you can ask: will you pay me for this?
Startups often go one step further by creating a ‘minimum viable product’ – a stripped down version of your product or service that you can start selling immediately, with the intention of adding features incrementally. Amir Khella’s story of setting up Keynotopia – a commercial version of an app prototyping system he developed for his own use – encapsulates this idea perfectly.
This works great for online businesses but it doesn’t matter if what you really want is to start your own Italian deli. There are still ways to check the viability of your idea cheaply. Set up a stall at a local farmers’ market and sell just one kind of sandwich that distills all of your ideas for your deli.
Did it sell out? Did people think it was too expensive? Wrong crowd? These are all valid results that will tell you much more about the viability of your business idea than simply asking friends if they think you should go for it.
Will Enough People Pay For Your Idea?
Yes, there are people out there who want to give you money in exchange for your product or service. That’s great, but before you wave a cheery farewell to your boss, hold on a second.
Are you sure there are enough customers for your product to allow your business to support you financially? There’s nothing wrong with serving a niche market. Those are often the markets where specific problems have not been addressed. But there might be a reason why nobody has pursued your idea already – there are simply not enough potential customers out there to allow the business to scale.
This is where more serious research is necessary.
Sam Altman, President of Y Combinator, the world-famous Silicon Valley startup incubator, warns that too often entrepreneurs fail to focus on the size and growth potential of their target market. Check out the video below for more on his thoughts about business ideas.
Gut Check Time! Do You Love Your Business Idea?
So, here we are. You’ve prodded and probed your idea. You’ve done your research and canvassed potential customers. You feel confident that your business idea stands a fighting chance of success. And yet… you’re just not feeling it. You know what you need to do next but you just don’t feel ready to take that next step.
It’s understandable to be nervous about going it alone, but before you give yourself a stern talking to and forge ahead, think carefully about whether the next two points apply to you:
You’re not passionate about your business idea. This is a big red flag. Really big. Starting your own business requires long hours, financial sacrifice and gut-wrenching rejection. It is possible to have a great business idea that just isn’t for you. Maybe you work in an industry you hate but you’ve spotted a specific problem that could be solved better. Sure, you could have the freedom and satisfaction of setting up your own thing, but you’ll still be working in an industry you hate.
You’re loving your life right now. This is a difficult one. When life is great and you’re feeling confident it might just be that you feel most ready to start a business. Anything seems possible. But there’s the rub. You’re going to have to leave behind that great company with flexible working hours, excellent facilities and inspiring colleagues. And let’s not even talk about that monthly paycheck.
No matter how original your idea, the success of your business is always going to rest on how dedicated and tenacious you are in making it a reality.
This article was syndicated from Business 2 Community: How to Know if Your Business Idea is Good Enough
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