One sure fire way to see if your startup idea stands a chance
Before you go all in
A message I received yesterday said simply this:
“I’m building the shell of an app, then I’m going to go raise some money”.
So simple it sounds great. #thedream
Dreams aren’t reality.
Yes you can make them so, and that’s what starting your own business is all about, right? But there is one key thing all successful businesses have, and it isn’t investment. Academic books on entrepreneurship call it ‘product market fit’. More simply: customers.
Let’s look at what my friend has:
- A loosely researched market gap
- An innovative idea
- No dominant competition in that space
And on the surface, a quick way to quit their job and make it big as an entrepreneur.
What don’t they have?
Market research. It’s the reason I quickly (or not so quickly in the first case) binned three previous ‘great’ ideas for a startup. It doesn’t cost the earth, and the time spent doing it can either help weed out the bad ideas, or really focus the good ones.
What is market research?
Market research is as simple as it sounds. Researching the potential market for your product or service. Talking to people! Often it’s associated with an established company — fine tuning products. But it’s just as important, if not more important, at startup idea stage.
- Industry specialists.
Whether or not you’re in your world or looking into a new one, other people who have lived and breathed it probably know a lot about customers, or potential ones. Asking industry specialists will give you a broad overview of customers so you can start your market research in earnest. As a bonus, you might also get a bit of feedback on others who have tried to solve the same problem/need before you.
Want to build a new app for the world to use? You’ll likely need a big audience to make it work commercially. Surveys are a great way to ask a lot of people and build a big data set on the viability of your idea.
If you’ve narrowed down your idea to specific potential customers, interviews are a great way to get detailed feedback. Unconstrained by the limitations of the survey questions, you’ll likely get candid opinions, and maybe even some new ideas!
Why is market research important?
Market research gives you three key things to help decide if your idea is worth pursuing, and or how you should go about it:
- Problem identification.
All new businesses solve a problem or a need. Who’s best to ask to verify this? Everyone else!! Don’t just take thoughts from family and friends, they’ll most likely agree to encourage you, or the ones that are forthright will be so dismissive they’ll reject the idea before it’s left your lips.
2. Solution identification.
Potential customers know the problem or need. They’ll have suggestions on what might help solve it. Or without you giving away everything, will give feedback on your proposed solution.
3. Market size.
Once you have a firmer grasp of the problem/need, and a potential solution, you can start to look at what the potential market is. It’s the market research that will form the basis of it — how many potential customers do I have, and how much would they pay for a solution? And that’s super important. Whether you want to make a living or the top of the Forbes Rich List, the potential market size will help you see if your goal is achievable.
A fighting chance
With market research, here’s what my friend could have:
- A clearly defined problem or need (which confirms the market gap)
- Data on possible solution(s) (which is where their innovative idea comes in)
- A starting point for considering the total addressable market (which allows a truer reflection on the competition)
Then they have more information and data to help decide if they want to quit their job, and a starting point as an entrepreneur. One thing that’s been removed? The reference to quick! It’s a long journey, but starting it out with market research is going to make it a lot smoother.