So you’ve had the idea, and the Next Big Thing is in your hands. But before you start says Carl Reader, developing your business or product, and definitely before you can start making money, you need to test your idea to see if it works. Testing it out will save you stress, money and hassle later down the line.
Unfortunately, not everyone will share your passion and vision from the off, so you need to be able to prove that your business idea is viable if you’re looking to start a business, particularly if you will require funding. You’ll need to show how you’ve tested it, and justify that it’s a good concept based on the proven fact there’s a market there.
First things first, you need to build your minimum viable product – the simplest form of whatever it is that you’re going to deliver. You could skip this, and just describe it to people, of course. However, I guarantee this is inferior in most cases. Most likely, the vision you see won’t necessarily correspond with what they see, and they may not understand exactly what value it will bring to them. What is far more convincing is if you can build the concept of what it is you’re looking to do. Having a version of the product to test means any tweaks and changes can be made in response to real feedback from your target audience – but only if they’ve got something for them to really feed back on.
Following on from that, you need to try and generate revenue however possible. There are some “unicorn businesses” – the Facebooks and Snapchats of the world – who started with a great idea and correct data, but without a clue about the monetisation of it, at least in the early days. You can hope and pray you’ll get as lucky, but to be blunt you’ve got more chance of winning the lottery than achieving that yourself, so you need to look at monetising and proving your revenue streams yourself. Work out and demonstrate exactly how the investors in the business, whether that’s you, external debt funders like the bank, or equity funders – can get a payback from it. If people are willing to put their money where their mouth is, that’s a definite positive sign. If not – it’s better to know early on in the process.
Market research is vital at this stage. Even better, it’s really easy to do in today’s day and age. There’s no more going to the library and digging out the microfiche – you can do all the research you need on Google. You can also do a huge range of practical research appropriate for your business, whether that’s spending time in a hundred different locations with a little clicker to find out what the footfall is past an area, or scanning hundreds of menus of surrounding similar restaurants – whatever it is you need to do or find out. Get out there and find out what you need to know.
One of the most helpful activities I’d recommend is looking into running a focus group of your ideal new customers. Get 10 of them together, lay on a few drinks and have a chat with them. Find out what they want, directly from them. Ask what problems they face, and see if your business is really addressing what this target market need. You can then tweak your business accordingly to meet this.
Testing your business idea thoroughly is key – but make sure the follow up from your testing is just as thorough. Learn from it, put your learnings into action and adjust to make your business as attractive as possible – both for clients and investors. With a bit of planning, preparation and bigger-picture thinking, this kind of getting data on and around your product means you’ll know exactly what your market want, exactly what your business can offer them, what works, what doesn’t, who is interested – all vital pieces of knowledge for getting your business off the ground. Testing your business idea is the perfect way to prepare yourself for actually starting a business.