Top 10 Critical Things You Need to do Before Investing Any Time or Money Into Your Startup Idea.

You have a great startup idea that you’ve been sitting on for months and all of a sudden, you are inspired to take the next action step to finally implement this new idea.

Well, well, well……, let’s put the brakes on for a minute. That is how many new and inexperienced entrepreneurs start when they embark on a new venture – They are super excited about their new startup idea and are in so much of a rush they overlook some of the most critical things necessary to make the idea stick and end up wasting 6 months of their lives plus burning reams of money building something no one wants/needs, or aren’t willing to pay the requested price.

Before you spend a dime or pesewa building anything, It is a must that you find a way to quickly assess the feasibility and viability of your startup idea to see if you should forge ahead with confidence, pivot, or go back to the drawing board altogether. This should always be the first step for every founder who is considering pursuing an idea.

Below are 10 practical steps to take to validate your startup idea and create a viable business. 

1. THE PROBLEM

Start by validating that the problem is actually a problem people want to solve. Ask yourself this question; “What problem does my startup idea solve, and how painful is that problem?” Remember, great businesses are built on big and painful problems.

Ask yourself if the solution to the problem you have identified will result in a “vitamin” or a “painkiller”. It is tougher for someone to convince you to buy a vitamin than it is to buy a painkiller. 

If you have a nasty headache, you don’t need any convincing to buy ibuprofen. Infact, you want it so bad and want it now. Selling a “painkiller” idea will be far easier.

2. TALK TO YOUR POTENTIAL CUSTOMERS

Sampo Parkkinen, CEO & Founder @ Revieve puts it this way – The best way to validate your product idea is to talk to your customers or users of your product. Don’t pitch them your product directly, but rather try to highlight if the problem your product is solving is in fact perceived a problem by your users and what is that problem causing them currently. This will help you figure out if the problem is worth solving and if customers would be willing to pay to solve the problem.

The mission here is to validate your idea in the eyes of the customer and even pre-sell the solution. TAKE MONEY. Real actual money. The only way to tell if something is viable is to take money from people who will buy it. Apple does this all the time – They announce new products in September and start taking orders immediately although the product will not be available until the end of November/ early December. 

The people you are looking for are called “early adopters”. These are people you think could benefit from your solution who could actually buy or at least have the money to buy.

3. THE SOLUTION

Here, you must dig into the various features of your solution and ensure that where you’re focusing your product effort is proportionate to where your customer has the greatest pain.

Ask yourself these questions:

  1. How is the problem being solved today by customers?
  2. Which features of the solution resonate most with them?
  3. After you’ve created the solution, what problems would still exist?

4. REVENUE

It’s time to dig into the revenue model. This will test for price sensitivity – what will be the best introductory price point for your solution, frequency – (will it be a one-off payment or a recurring payment model?) and friction (such as the complexity of paying for your product – how many steps will your customers have to go through in order to pay for your solution?).

5. TOTAL ADDRESSABLE MARKET (TAM)

The question here is, who is affected by the problem you are wanting to solve and to what extent? Start with your Total Addressable Market (TAM) by defining the industry you are operating in. Then you narrow that industry number down to the segment within the industry you are working in, remember to include the market captured by your competitors.

Then you further narrow this down to your Target Market  – the portion of that market you can reach with your sales channel.

6. COMPETITION

Who is already trying to solve the problem and what are their strengths and weaknesses?

If you’ve identified a problem that is experienced by a lot of people, odds are someone else too has. Find out who else is approaching the problem and how. Even though there may be other companies trying to solve the same problem as you, they may be going about it in a completely different way. Competition can be a threat, but it can also be a strong indicator that you’ve found a problem worth solving.

Once you’ve identified some of the key competing players, the next step is to analyse their strengths and weaknesses to identify potential feature gaps that you could exploit.

You may think your idea is unique and no one has ever thought about solving it. If that is the case, that doesn’t mean you are off the hook. Identify what people are currently doing to address the problem. It may not be a solution that perfectly addresses the problem like you aim to, but a customer’s existing behaviour can be difficult to replace if it adequately addresses their needs. Whatever solution customers are currently using to alleviate the pain caused by the problem is competition for you and should be approached as such.

The key thing at this stage is to not get intimidated by the existing players particularly if they seem bigger and well established than you are.

Dropbox founders once approached Google for investment. Google’s leadership at the time told them Google was already working on a similar cloud-based software (Google Drive) and that the Dropbox founders shouldn’t bother. In fact, they claimed Google would “crush them.” The Dropbox team pushed forward regardless because they felt like they had a different, unique, and better solution. They are a multi-billion dollar company now and won over substantial market-share.

Lesson:

There are always competitors and just because someone else is doing something similar to what you want to do, doesn’t mean you should stop or be discouraged. It simply means that you will have to do it better than them. Markets are often large and accessible for multiple players to survive.

7. CUSTOMER TYPES/ATTRIBUTES

Your early adopters will have specific attributes that are meaningful to your product. Focus on simple and obvious attributes that clearly represent your potential customers. These are the people you will initially target with your marketing efforts.

At Prinnto.com, we identified 4 classes of customer attributes that described our customers; Price, Engagement, Sophistication and Demographics. Out of these, we concluded that since we wanted early adopters to start with, we were going to focus our marketing campaigns on customers that met the following criteria:

  • Quality buyers
  • Repeat shoppers or Evangelists
  • Novice (They don’t need to be tech experts to be able to use our online designer tool)
  • Geographical Area (Initially the Accra/Tema area)

8. BUILD AN MVP

Once you have validated your product idea by proving that indeed the problem is worth solving, you quickly build what Eric Ries calls a minimum viable product or “MVP”. This is probably not an early version that you spend months building, but rather a shell of a product that you spend days or hours creating. It could be a single web “landing” page, a demo video, or a “concierge” service that you pitch directly to potential customers. Then you try to start selling it or getting people to commit in some other way — like giving you their email address for when it launches.

Chances are you won’t see the results you want with your first attempt. So you talk to your early adopters, learn more about what they want, and optimize your offer — for example, by A/B split testing different landing pages with different pricing, messaging, and features. After you’ve optimized for a while, if you still don’t have a viable business model/conversion rate, you pivot — making a more radical change to your product or target market.

Then you go through it all over again. You do all of this before making any real investment into your product like spending a year and $100,000 building a product, you can learn and adapt quickly until you find the right product/market fit — or until you realize there’s no market for your original vision.

The result: you’re much more likely to succeed, and if you fail, you find out quickly and cheaply.

The Lean Approach

A few years back, a couple friends had this grocery delivery service idea that they later built into a successful online service and mobile app: Food on the Table. But they didn’t use any of the traditional startup approach. Here’s what they did:

  • Before building anything — before investing in a single piece of technology — the founders went to a grocery store and started talking to shoppers, one at a time.
  • They asked each shopper a bunch of questions related to their idea — and then they described their service and asked if they wanted to buy it … on the spot.
  • Eventually, 1 customer signed up. Each week they met that customer at a coffee shop, interviewed her, and provided personalized recipes and a grocery list. They did all of this manually. And each week, they collected their check for $9.99.
  • Over time they added a few more customers and provided the same “concierge” service to them.
  • Along the way, they were testing their core business assumptions with paying customers — and adapting the product accordingly.
  • Only when they had too many customers to handle manually did they start designing and coding technology-based pieces of a product that could scale.

9. BUILD A LANDING PAGE TO CAPTURE LEADS & PRE-ORDERS

One of the quickest ways to validate your startup idea will be to create a landing page – which is essentially a one page website which summarises the benefits of the solution and a call to action to capture leads and or request for pre-orders. There are so many tools you can use to create simple landing pages including; unbound, instapage and optimizepress.

10. RUN DIGITAL ADS TO THE LANDING PAGE

Ads via Social Media or Google Adwords is a solid method to explore the interest of your target demographic. It allows you to target your audience with tailored marketing messages about your product or service. This method helps to figure out numerous angles of the business such as: How much it may cost to acquire a potential user? What words, images, and emotional cues resonate with your target audience? 

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