Whether you are working on an entirely new venture or brainstorming new features for your current product line, it can feel extremely overwhelming. The uncertainty of how your solution will translate with consumers can paralyze even the most ambitious of entrepreneurs. And while there is no guarantee that your idea will be a hit, there are foundational questions you ask yourself to decide whether or not to move forward with the idea.
1.) Who are your customers?
Although it is tempting to start iterating on a solution right away, take a step back and consider who your customers would be. Go beyond generalizations and blanketing statistics, and get as granular as you can with who they are, what they do, how much they make, and why your startup can solve their problem.
After you have clearly defined the customer, go out and get in front of as many people as possible, at minimum 100, and have a conversation. Frame the questions as a research project and only mildly touch on the pain points you are trying to solve. The point of these conversations is not to pitch your solution, but to understand what your market needs. Taking the time to validate your idea with the intended customer segment can help prevent unnecessary headaches, wasted resources, and broken spirits.
If you cannot scrape together 100 people in your target market it may be time to reevaluate the idea. Going through this process will also help you hone in on what your unique selling proposition (USP) would be if people seem to share a common pain point.
2.) What is your value proposition?
Once you’ve had some conversations with your intended market, you will hopefully have gathered some insight on what your solution could be. Consider these questions when determining your value proposition:
-Is the problem you are addressing unworkable? Does the solution fix something where there are real, measurable consequences of inaction?
-Is the problem urgent? Is it a top priority for your market? Is it so urgent that they would pay for a solution that solves this issue?
-Is the problem underserved? Is there a lack of accessible, viable solutions to the problem you want to solve? Do your homework on the existing solutions and potential competitors and assess how they are doing.
You may also realize that though there is a compelling need for the market you want to sell for, the size of the market may not be worth the effort compared to other ideas you could pursue.
3.) How will you make money?
All of your time and efforts may be for naught if you cannot answer this foundational question. Investors will ask this question every time, and you should be able to articulate your business model if you want to take your idea further. Consider all of the ways you could make a profit. If you are a software as a service, purely ad-based revenue may not make as much sense as a monthly subscription that scales based on usage. Though the business model may change as your startup grows and potentially pivots, you need to understand what financial model will get your idea to the next stage. Investors understand that when you pitch, you may have not yet made any money. However, it is reasonable that if you want to raise capital to get your startup idea off the ground that you can explain how you will recoup their investment in addition to a favorable ROI.