While you may think coming up with a product based on a gap in the industry is all that it takes to taste success, you need to factor in a lot more details to have a profitable enterprise.
Being a part of the startup ecosystem, I had the opportunity to meet a lot of startup enthusiasts and entrepreneurs, and hear out their experiences and stories. Some were happy, some stressed out, and some nervous. It was a great learning experience for me as it helped me figure out why people succeed, and why they struggle or fail in their entrepreneurial journeys.
In one such closed group meetings, I came across a technologist who had started his own tech firm two years ago after spending more than 20 years with one of the industry’s biggest players. He mentioned that while working on a particular project in his previous organisation, he figured out a gap in the offering that no one cared about. He then reached out to his clients and asked them if they will be happy to get this gap filled in. On receiving a positive response, he decided to call it quits one day and with a couple of other like-minded people (technologists again), started his own firm.
It took the team close to six months to come up with the product. And when he approached the same set of clients, they were happy to see the gap filled in, just that there was one issue – no one was ready to pay for it. On further interaction, clients shared that while they were happy with the solution offered, they didn’t feel the need to spend extra money on the same. They were happy to consider it if it was offered free of cost to them (as an add-on to the existing product).
At that time, the gentleman realised he missed out on one of the most important aspects of doing business – the product saleability. And that prompted me to wonder what came first: the product, or thorough market research.
As an entrepreneur, we constantly think of challenges that we face in our daily lives, or in our working environment, and try to figure out a solution that can be offered to the consumer. We choose a solution, depending on how we feel the big the gap is. For example, some people feel there is a lot that can be done on social media, and hence focus on that, and some feel they can help consumers in selecting certain products better, and therein lies their focus.
As far as my interaction with different entrepreneurs is concerned, the idea usually stems from the mind of an individual (typically, the founder), and he or she leads it to next steps. I figured out in most of the cases it was an individual’s ability to sniff out =a gap that helped result in a product.
So what’s wrong with that? Nothing; just that most of the times, these individuals refuse to validate their thinking with reality. They are so sure and confident of their idea that they don’t feel the need to cross-check if it will be accepted well in the market. Personal egos and rigidity sometimes take over practical thinking and that’s where the most important step before launching a product is missed out - doing thorough market research before turning one’s dream product into reality. This was what had happened with the gentleman I mentioned earlier.
And that’s why I strongly feel that the first step to kickstart any idea is to get it validated and be assured that one is moving in the right direction. Here are a few steps that a budding entrepreneur must take in order to ensure he/she is moving in the right direction:
- Acceptance of the solution/product in a closed group: You have identified what you are going to work on, and are confident that it’s the need of the hour. But before beginning to work on it, you must validate if the market also feels so, and if there is a genuine demand for it. Start checking with your friends, explain to them why you are thinking along these lines and how it will benefit the end users. Talk to people who have faith in you, and who will give you genuine feedback. Ask them to answer candidly, and ensure they just don’t respond to please you. An initial check will help you in determining if you are on the right path or not.
- Acceptance of the solution/product in the market: Once you have gained confidence of the product’s acceptance in your closed group, please don’t stop. Now is the time to do a reality check. Move out of your comfort zone and do thorough market research. You may use an MR agency or, if the budget doesn’t permit, use your relationships to talk and reach out to maximum potential end users. This will be the acid test as their acceptance will determine whether it makes sense to explore the idea further.
- Only acceptance is not crucial, saleability is: Many times, I have heard people saying, “I wish this product had this feature; I wish I had something that could do this,” and I’m sure you would have heard that too. Generally, I ask them immediately – will you pay for this, and in 90 percent of the cases the response is a straight no. And that’s the difference between accepting a product and paying for it. A lot of people may say that they love the product, but then you immediately need to ask if they are willing to pay for it. We all love freebies, don’t we? But when it comes to paying for a product, we start calculating as end users. This might be the most stressful exercise for you, but don’t worry, if you pass this critical test, your battle is half won and the solution has a green signal from the consumers. Please note that in some cases, the users may not pay for the product but you may earn revenue out of it through other mediums (eg., sponsorships). In such cases, you may touch base with the relevant audience that would bring in the revenues and have their buy-in on the concept.
- Backward calculation: The product is validated, the users have accepted it, and they are willing to pay for it too. Now is the time to prepare your business case. Plug in the costs that you may incur, and the revenue that you will generate. It will help you to ascertain whether your product is business-ready or not (in terms of profitability). It may not be perfect, but if the figures don’t match, you may need to rethink your strategy.
- A mentor on board always helps: As an entrepreneur, you are always excited, and raring to do more than you can execute. It’s natural, and that’s when you need to have someone who can guide you, help you in refining your thoughts, and ensure things are executed in the right manner. A mentor can be a huge asset and can keep a track of the overall picture, while you delve into the operational nitty-gritty. Mentors can give you insights with their own experience and also help in connecting with investors, partners, valuable resources and a lot of other people who might be able to add value to your business.
So, before you start working on your product, tick off all the above points to ensure you have got it right. Trust me, these are very difficult steps but are critical to ensure you don’t face any difficulties once you are into it. While there would be lots of learnings in the journey that may result in a certain change in strategies too, the rock-solid base created by you will keep you afloat in the long run.
(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)