Are you ready to start a new business ?
One of the common mistakes made by entrepreneurs is assuming they have just come up with a unique idea that is going to save the world from a common problem. They get so passionate about the idea that they often forget to validate this with their target audience. This results in them building something that already exists or offering something that doesn’t have a value proposition. And as expected most of those businesses end-up in the cold shelf and the entrepreneurs after burning what little they had will get back to work trying to get over the sour episode of their life.
So If you have just been hit with a great idea and before you get on the surfing board, do a self-assessment by answering the questions below.
1. Why should I spend my hard-earned money on a product without validating it first?
2. Should I build all the fancy features before I launch?
3. What’s my user acquisition strategy? Can social media help me here?
4. How am I going to earn money to pay for my resources? Do I have a good revenue model?
I will touch very briefly on the above and will tell you why they are important.
Why should I spend my hard-earned money without validating my idea?
You have to be passionate about what you are building but at the same time you have ensure that there are others around you who are also having this same problem as you.
So does your solution solve it and how big is your target market?
Once you have answered these questions honestly then go to the validation part.
So how do I validate my business idea?
There are several ways you can do this and I am going to list a few that worked well for us.
- Talk to your friends and tell them what you are going to build and then be a patient listener.
- Create a survey with very few questions (5 or less would be my safe bet) and invite your friends and relatives to answer it.
- Create a facebook advertising campaign and specify the target audience and send them to the survey page.
- Create a homepage for your product and mention what you are going to build (don’t reveal everything) and put an email box asking visitors to share their email address so that you can notify them when you launch the service.
Collect the feedback and compare them with your own answers. Are you convinced there is a need?
Should I build all the fancy features before I launch?
This is where most of the businesses fail as they wait to put the ‘bells and whistles’ and misses the feedback from early-adopters. A rule of thumb for startups is to enter the market as quickly as possible and then integrate the fancy stuff by doing quick time-boxed iterations.
Imagine where Mark Zuckerberg would have got to if he waited 7 years to launch facebook with all the fancy features it has now.
So the idea is to build a Minimum Viable Product that lets you get to the market rather quickly and then fit yourself before you run out of money.
If I were to build facebook, my MVP user stories would be
- As a user I should be able to create an account so that I use the service.
- As a user I should be able to login so that I can see my friends activities.
- As a user I should be able to post my updates on the wall so that I can share it with my friends.
- As a user I should be able to invite my friends so that I can build a network.
- As an administrator I should be able to pull up user reports so that I can do some analytics.
And I could get someone to build this MVP in 8 weeks for less than 8000$. And If my business doesn’t get the expected traction and even if I quit, I loose only a few thousand dollars and can still survive the trauma. So build an MVP to further validate the concept and enter the market before you run out of money.
What’s my user acquisition strategy? Can social media help me?
It’s such a broad question but you should have some answers before you start. If you are planning to rely on facebook and twitter to send traffic to your website, then I suggest you revisit your decision as social media markets are very crowded and you might even go unnoticed.
So what else can you do to bring customers to your website?
Again facebook advertising campaigns can bring users to your website but that alone should not be your primary marketing technique.
I suggest you checkout the presentation ‘From Zero to a Million Users’ by Adam Smith who is the founder of Xobni. He passionately talks about lot of techniques that applies to all the market segments. So be sure to adopt a few of those.
How am I going to earn money to pay for my resources? Do I have a good revenue model?
This is definitely the most significant question that decides the fate of your business. If you have a financial model that largely depends on advertising revenue then your chances of raising investment is 1 in 100. There are a few exceptions like Quora that raised $14 million and valued at $90 million and their revenue model is still a mystery. But don’t be over-joyed; we don’t get to hear too many stories like that every year.
Fundamentally you need to understand your target market and then realign your business model to plan for growth, investment and revenue. This is easier said than done but that’s why you chose to be an entrepreneur.
My advice to startup entrepreneurs – Startups are never cheap or easier to build and don’t trust people who say so because they have never built one. To succeed, you need a good idea, excellent planning, awesome implementation, right timing, perseverance and lot of passion.