How to know your idea is not workable
Validation of both the business/idea and the customer is very critical for any venture. If it’s properly done, you will understand pain points to address, whom to address to and how much money can be made from it. Oversimplified way of putting it would be to know the idea is not stupid. Most successful people treat validation as going from an idea to idea that works.
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According to me, an idea can be objectively validated. It should be unit positive in revenue and must at some stages be deemed as scalable.
It is crucial before you shell out your assets or resources in terms of money; your valuable time into building a product; and setting up the business and/or hiring people.
SOCC Methodologies by which you can test your idea are:
1) Surveys: Conduct survey and collect data from as many people who are related or could be your potential target market. Surveys are very important to validate assumptions at various levels. Use Survey Monkey, Survmetrics or Google Insights for surveys, and Applause for customised feedback.
2) Online Pull-Based: Make a good Landing Page. Use Google/Facebook ad words to get traffic, and make and share surveys on targeted communities. There at several tools available to use for each method - Use Launchrock, QuickMVP, Wix, Wordpress, Unbounce, etc for landing pages. You can literally set up a landing page in five minutes that contains a clear call to action.
Note – this may not be for everybody, but more for consumer-centric models. For B2B models, elements of pull-based technique could be useful.
3) Cold Calling: This is the easiest and crudest to start with. Identify the target market and try to simulate one or more sales to potential customers by cold calling (email or phone). If they find the product compelling, it might be a hit and you have your first references accounts already lining up. Some questions that can be also included to get a good grip can be:
-Ask how they solve the problem now
-Ask how much they'd pay you to manually solve the problem (concierge style)
-Ask if they can recommend someone else who has the problem
4) Crowdsource: Crowd-sourcing is not preferable, but if your idea is at an advanced level, run a crowd-sourcing campaign like KickStarter. It has another advantage, as you get money upfront and a good fan following if the campaign is executed properly.
Some important advice:
a) Separate the problem from the solution. Focus on what your customer wants but, not on what you think. Think like the customer.
b) Stay away from negative people; they have a problem for every solution and an adverse solution for all problems.
c) Friends and family are good source for contacts, but not to validate your idea due to error-prone bias feedback.
Next steps are simple: once you identify the exact pain point for which customer is ready to pay, how much is scalable and sustainable? Build a prototype while involving your customer, and start closing your sales assuming you have enough money to boot strap till you get initial few customers.
P.S: Keep Passion on back burner. If you love an idea, but it’s not good enough to pay yourself enough, show some mercy on dear ones and make it a hobby, not full-time. it’s very taxing on everyone near and dear, and if you can’t normally support near ones, you will be over-taxed and screw up. Passion kills, more than smoking does.
About the author:
Sainath Gupta started off being part of his dad’s business, Bajarang’s Industries, from age of 12, and played a pivotal role in shifting from distribution of GLS bulbs to manufacturing of Aircoolers. Later, he dropped out from IIIT Hyderabad, started Aasaanpay, which is the first mobile POS company in India with his two Juniors from IIIT H. Currently, in addition to Aasaanpay, he is also mentoring other upcoming startups from IITs and IIMs. Feel free to connect to him at https://www.linkedin.com/in/sainathgupta