As the moguls on Shark Tank often say, you’ve got a product, but you don’t have a company. Or, you may have a great idea, but it’s not yet a business. Making the leap from concept to company is where many entrepreneurs stumble. Read on to learn whether your big idea may be a genuine business opportunity.
Is there a defined market?
Who are your ideal customers? Are they individuals? Other businesses? Answers like “all of America,” “anyone with a mobile phone,” or “every female on earth” is far too broad to tackle with a startup and shows you don’t really have a strong understanding of your market. Realistically, how big is the opportunity? What channels exist to reach your target customer? Are there competitors? If so, look into more than just the success stories. Is there a similar business you can identify that didn’t find success? Ask yourself why, and what you can do differently.
Does it solve a problem or fill a need?
Marc Andreessen of Netscape fame and now partner in prestigious venture capital firm Andreessen Horowitz wrote a seminal post back in 2007 where he coined the term “Product/Market Fit”; a principle that still guides startups today.
Product/market fit means being in a good market with a product that can satisfy that market.
Does demand exist for what you are offering, either literally in a tangible product sense, or figuratively in that there is an inefficiency or problem that needs solving? Is the market size substantial enough to support your business?
Is your concept disruptive, transformative, or at least sufficiently different from and/or better than similar products on the market? What is your competitive advantage? If a competitor already has significant market share, how are you going to wrangle it away from them? You may need to reconsider or reshape your original idea. It’s far better to realize this early on in the process to save time and money.
Is someone willing to pay for it?
It takes something compelling to get consumers to actually open up their wallets. Is your product something that would be nice to have? Or is it something so valuable that your target customer would actually pay for it? And if so, what price would they truly be willing to pay (and would that amount be profitable)? Alternatively, do you have a clear vision for how you will monetize your idea? Perhaps that’s why around 90% of all apps created for iOS are free. Do you have the funds to support your venture until that is likely, plus a significant financial buffer? Determining if you can build a profitable revenue stream, especially one that can scale, is not as easy as it sounds.
Have you gotten feedback?
Find people who are familiar with the market, the business model, and any other players; people
who have been there, done that, and can give you insight and perspective that you may not have thought of on your own, or only come to understand after hours of research.
Also, talk to customers or potential customers in your target market and find out what they think about your idea. Keeping your idea all bottled up because you’re afraid someone might steal it is a rather unlikely scenario and could certainly be worth the risk in order to gain crucial insight into whether you have a viable business concept. If you’re paranoid, you don’t have to discuss your “secret sauce,” but at least offer up the fundamental concept to people you trust to see if it’s appealing.
Don’t ignore critiques, believe they don’t apply to you, or take it personally, no matter how painful they might be. Not only are you potentially deceiving yourself, but ignoring the valuable feedback you receive is a sure way to get people to stop offering it to you in the first place.
Do you know how you will target and attract potential customers?
Posting your idea or website on social media and waiting for it to go viral is not a marketing plan. Seriously. You need a thoughtful, comprehensive marketing strategy combined with exceptional execution to get your product to stand out amongst the constant onslaught of companies vying for attention.
Are you ready to act?
The key to turning your idea from concept to reality is action. Without action, it’s just another idea that never goes anywhere. Are you prepared to commit the time and resources to your idea to give it any real chance at becoming a successful business? It takes time, persistence, and in nearly all cases, at least some money. Creating a company isn’t something you can go about nonchalantly, so if you go into it thinking you can skimp on those requirements, you’re better off not bothering at all. So once you’ve done your homework and feel confident that your big idea can become an actual business, all that’s left is to go out and make it happen!
Starting with just a few hundred dollars and no marketing budget, Michael Epstein founded a manufacturer, distributor and retailer of consumer electronics that achieved a million dollars in sales in its first year and continued to expand, generating tens of millions in revenue. He also acquired several distressed online businesses and reinvigorated these brands with new products, marketing, and distribution. These refocused businesses once again began to grow and flourish. Having cultivated a successful enterprise with global reach, the company was acquired in 2013 by private capital buyers. Michael now passionately serves as a online strategy consultant for a diverse range of businesses. You can find him at www.getonlinewithme.com