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The past few months I’ve mulled over the idea of putting together what will eventually look like a book on starting a business. I believe there is a gap in the process of starting a business that is wide. The gap is evaluating an idea for commercial or business potential. I plan to write a multi-part series over the next few months, even years, focused on the process of evaluating an idea, putting together a plan, raising capital and building a business. I hope you’ll enjoy the process and walk with me through this on your own.
This ‘gap’ of evaluating ideas for potential came to me as I considered how best to do a startup on my own. Much of the next few parts will focus on my experience and the experience of those who have pitched ideas to me. It is important for me to convey that ideas are a good thing, maybe the best of things, and I believe they are the foundation for innovation in our society. Don’t let this process discourage you, but rather let it be the foundation you go through as you implement your idea-evaluation process.
Step 1: Evaluate whether your idea solves a problem!
Ask yourself if this idea stems from a real problem you have encountered. It’s fundamental to all businesses that they solve a real problem in the market. Think back to successful companies both recent and older. Did their solution solve a real-world problem? Could others have the same problem? The basis for building out your idea must come back to this idea. It is the underlying theme of why you want to build this business. I’ve run across dozens of wannabe entrepreneurs (mostly friends, I’m sorry if you are reading this) including myself, who think that something is brilliant for two reasons: Either they believe it is so technologically outstanding that it will be purchased by all consumers due merely to its cool factor, or because they want to start a company so badly that just a unique idea denotes the need for a business. Neither of those is a valid reason to start a business. Frankly, ideas are like…pinky toes, everyone has two of them, but yours aren’t useful to anyone else.
2: Use the Internet to discover whether this is already being done!
With the current technology we have, there is no reason that a decent idea can’t be evaluated by merely using Google. Don’t get me wrong; many startups will develop and enter a Beta phase in “stealth” mode. My real premise here is that there are NO unique ideas. Zero! Zip! Zilch! Anything you have ever considered to be the best idea has already been thought of…by many people. If you have a problem, someone else has that problem. Entrepreneurs and innovators are everywhere. What really matters is execution. Can you apply your unique idea into a killer app? If so, you may have a differentiated product to move forward on. Use tech startup sites like VentureBeat and TechCrunch to keep up to speed on what’s hot in startups and the investment world. Be aware that not everyone will be telling the world about their great idea until a product has been launched. The reality is that most startups have to engage customers, partners and investors somewhere along the way. Those people will most likely talk about what the startup is doing, and word gets around. If it’s hot, people will talk! Keep this in mind, if it’s not out in the market and appears obvious, ask yourself why?
Step 3: Decide whether your solution is better than what is out there!Once you feel that the idea solves a problem and the same solution does not exist, evaluate whether your idea is better than what you do see out there. I’ve seen quite a few startups that were trying to solve a problem where a market did exist, but they were merely slightly better, cheaper and faster. Slightly anything doesn’t build a business these days. Rapid innovation is occurring in all levels of business, so a fundamental breakthrough in technical specs, cost, speed-to-market or other factors are essential in launching a new business. Why would an investor put money into your company if you are 10 percent cheaper than the competition? Won’t the competition just cut their prices if you become a legitimate threat?
It’s important to evaluate your competition objectively. Competitors exist for a reason; they sold products to multiple customers. While their solution may sound basic and expensive, it still sold, and you have to prove that you are better. Evaluating your competition deeply will also help you to frame your problem statement. You could begin thinking that your selling point is price, but may end up selling primarily on a new set of features that save the customer more money. Read feedback about other solutions and products on the market. Understand customers’ problems better by reading what you can about the competition from the people who use the existing product.
Step 4: Ask: Does it pass the smell test?
It’s important that your idea passes the smell test, too. What I mean by this is: Do your friends think your idea is good? Do your co-workers? Does your church league softball team? What about the guy at the grocery checkout? And don’t forget about your barber, too. The point is, talk to everyone. Now that we have decided ideas aren’t unique, you are not afraid of someone stealing it, are you? Practicing your pitch early, one, helps you frame the problem statement, the solution, the benefits, the market and so forth. If the teenager sacking your groceries gets it, then you have clearly articulated your idea.
I firmly believe that feedback is fundamental to honing an idea. Therefore, listen to everyone! Listen to everything they say. Good, honest feedback will help you as you decide whether to move forward. Pay close attention to entrepreneurs and investors, though. Take everything you hear with a grain of salt as these folks have been burned and will often be somewhat negative at times. That’s OK, though, right? Criticism will help you to defend your idea once you start to sell. You will hear “no” many times before you are ultimately successful. Oh, and by the way: Network, network, network! Don’t stop networking. Consider every meeting, lunch, church event, softball game, and more as a chance to build relationships. Fresh ideas and perspectives will help you along the way.Stay tuned for the next four steps as we take a look at how to move forward with an idea as a potential business opportunity.
