Will My Idea Fly?
So, you’ve got a great idea for a new business, now what? Like every other aspect of a startup, you need to start by testing. This post will give you some pointers on how to achieve that.
Why should I test my idea?
You’ve got a great idea. You’ve mulled it over, and you may have discussed it with friends, or family. They all love it! Now, you’re pretty sure you could make a viable business out of it.
I’ve seen many startup owners who consider this all the proof they need before investing a lot of time, energy, and money into making their new idea real. Some of those startups will succeed, but if you research the statistics on startup success, you’ll find that only about 10% of startups survive for more than a few years. That means that 90% of them will fail. The costs to the people who own one of the 90% can be huge, financially, emotionally, and psychologically. The longer a business runs before failing, the higher the price, making it that much harder to bounce back with a new idea.
If your idea won’t fly, you’re better off failing as early as possible. Then, you have preserved your enthusiasm, time, energy, and capital to focus on a different, better idea, because the price of early failure has been far less.
Putting your idea through its paces is a cheap and effective way of deciding whether you should commit resources to getting it off the ground. This process is especially important if your idea is the sort of business that will demand a lot of time, assets, staff, or cost to set up.
By testing your idea early, you will reach one of three conclusions:
1. Your idea is great, and you should invest in making it a reality
2. Your idea isn’t bad but could be made better
3. Your idea won’t work out, so save your energy for something else
If you don’t reach a conclusion, you need to invest more time and effort to understand, and be able to communicate, what your idea is about before testing it again.
So, how do you test a business idea?
Step 1 – Define Your Idea
Sit down and think about your idea. Write the story of your business and be prepared to tell it to others. Think deeply about what might work, and the advantages and disadvantages the idea has, then write it all down. Finally, estimate what realizing your vision will cost you in invested time, money, and any other aspect that you feel relevant. Writing will clear your mind, relieving it of the need to remember everything. Writing is also a door to deeper thought, and alternate perspectives.
You could also use a Lean Canvas to define your business at a high level as, used well, it will bring more of a customer focus to your thinking.
A Lean Canvas is a simple idea but powerful in its ability to focus your thoughts on the essential elements of your business. It is not an onerous process to develop one and you could complete it in as little as twenty minutes, It then forms a reference point for your future business, reminding you of your original vision as you navigate the twists and turns of getting a startup idea off the ground. A template and s guided step-by-step Lean Canvas tool can be found on startuptoolshed.com. A deep dive into the use of a Lean Canvas will also follow soon.
Information you put into a Lean Canvas can help you to formulate a high-level business plan, that adds meat to the bones of your story.
In my experience working with startups, some common themes arise at this stage. First, you have made a lot of assumptions. Assumptions are OK, so long as you’re aware of them, and make testing your assumptions a part of your process.
Another common theme that I see in startup story writing is over-optimism, which may be reflected in your assumptions and narrative. You may not be aware of your optimism bias, which is another reason for testing your idea with others.
Step 2 – Pick Some Testers
Who are the best people to test your business idea? If you can find some, potential customers will offer the best feedback, but I recommend a cross-section of people to provide different perspectives.
When you’re looking for testers, try to find a mix of:
· People You Trust
It’s easiest to ask trusted family, friends, and associates to be honest, but the risk is they’ll want to make you feel good about your idea. So, ask them to put themselves in the role of a customer or antagonist, a devil’s advocate rather than a supporter. Not everyone can do this, but those who can, will provide more valuable feedback when you free them from their supportive role.
· Potential customers
There is no better judge of the value of a business idea than the person whose problems you’re trying to fix. Ask them to look critically at your idea, then listen carefully to what they say. They can give some great insight and ideas to improve your proposal.
· Potential investors
If you’re lucky enough to know someone who invests in young businesses, they can give you a very different perspective. They will be interested in you, your ability to convert an idea into reality, and most of all in your financial story.
When working with any of these people, be careful to listen carefully to what they say, and try to avoid being defensive. Make notes to remind yourself of their commentary later, and to visibly reassure your testers feel that you value what they’re saying.
Step 3 – The Big Decision
Collate the information you’ve gathered. Break down comments into those that support your idea, those that challenge it, and those that suggest alternatives.
If comments overwhelmingly supportive of your idea, I’d recommend that you seek further input from a wider audience. The same applies if comments are overwhelmingly dissenting.
Chances are that you’ll have received a mixed bag of comments. So, use the positive to strengthen your proposal, use the negatives as pointers to future pitfalls, and assess the alternatives to see if you can use them to adapt and improve your idea.
Finally, the time has come. You must decide.
Do you still have enough confidence to invest in your idea? The answer to this question is based in emotion as much as it is in fact, but if you do decide to proceed, you can do so with greater confidence. If you decide to fold, you’ve only lost a little and can move on to your next idea.
Either way, good luck!
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