25

Jul 11

You have a business idea? Now what?

I meet a lot of entrepreneurs eager for us to convert their idea and vision into an software application and thus start the money machine rolling. They're convinced there's nothing quite like their idea on the market and they're chomping at the bit to get it built and released. Build and they will come is the mantra. You may be one of these people. You have an idea, you're convinced it's a winning "no brainer" and all you need to do is find the cheapest developer to build it for you. If this is you, don't worry you're not alone and the other good news is you're reading this post, so you can be saved.

The objective of this blog is to convince you to stop, look and listen. Remember that phrase from when you were a kid? It isn't just for crossing the road, it's great advice for the entrepreneur, the startup, the early stage company all the way to the Fortune 100 companies…yes, even the Fortune 100 companies need to stop, look and listen when it comes to a new business proposition.

When I say "stop, look and listen" what I'm saying is you have to validate your idea before spending any time and money, especially other people's. What do I mean by "validate your idea"? In short, you need to make sure there's a bunch of people eager to part with their cash to solve a problem, to the extent that you can build a business around it!!

This doesn’t start with looking for a developer (and remember, I am one). It's not even to think about the solution at all. Your first step is to consider the PROBLEM(s) you're trying to solve. In fact, the top three or more problems you're trying to solve. The following steps are expertly defined by Ash Maurya in his book Running Lean. We highly recommend this book to entrepreneurs, startups and early stage companies where technology is the revenue generator. Our services include many of Ash's practices.

So how do you go about validating your idea? You have to start with the problem you are solving. Once you have done this, you must get out of your office and into the field to ask people what they think about the problems and are they a must-have in terms of a solution.

Remember the dot com bubble? Remember the myriad headlines of billions of dollars being thrown at internet projects? And remember that most of them died? That wouldn't have happened if investors had been able to ask “what are the top three problems you are solving?” and make sure the company could validate them.

I’ll warn you now, this is hard! I mean really hard and you can't do it alone…well I can't anyway. For example, I'm pretty good at helping our clients identify the problems they want to solve. But I recently needed someone to help me identify the top problems my company, KENOVA Technologies, is solving. So when you do this exercise, work with someone that's in an objective position and make it clear that you need to identify the problems and to bring you back to this theme when you wonder off into the solution, reasons, justifications, etc.. So make the point with your colleague that your only objective is to define the top 3 problems and nothing else.

The next step is to identify the customers, i.e., the people who would be willing and able to PAY to have one or more of your top three problems solved. Again it’s better to include other people, and at least one person who understands the industry that has the problem(s) you're trying to solve. E.g., if the problems are in education, find someone with experience in teaching.

Now that you have the problem and the customer identified, it’s time to learn if your hypothesis is correct. In other words interview prospective customers and ask them to rate your problems in terms of a solution: “must-have”, “nice-to-have” and “don’t-care”. You’re looking for at least one must-have response from at least 60% of your interviewees to claim your hypothesis has been validated. If you can find 5 to 10 candidates that represent the customer well, then you can move on to the next step, otherwise 20 to 30 interviews would be appropriate.

By the way; keep the interviews to 20 mins; ask them how they are solving the problem(s) today; can you follow up with them and do they know anyone else you can interview.

With the problem validated, you can now justify spending some more time and if necessary some money on your idea. What you need to do now is define the solutions to the three plus problems. This is the time you would want to involve a developer. In regards to developers, they should be able to brainstorm with you to define the solution. This would also be the time to develop a prototype or what KENOVA calls a Concept Presentation System. Armed with the solution, a Concept Presentation System and an idea of the price you want to charge, go back to the people you interviewed before and ask them to rate your solution (use the same criteria as the Problem Interview) and give you feedback on the pricing.

Continue these 2 basic steps; problem and solution interviews until you formulate a validated hypothesis, i.e., 60+% must-have response.

If you do this, you’re in the minority. That is to say, the most startups just don't do this. Therefore you’re ahead of the majority and will have a much greater chance of successes! This will also make it easier to attract partners and investors.

These are the foundation steps for a successful startup project; my other blogs build on this basic approach.

 

"This article may not be reproduced in whole or part without including the name of the author (James Naylor) and an acknowledgement of the fact the article was originally published in Shoestring Advice for Technology Startups (http://www.KENOVATech.com/blog). Any other use of this material is unauthorized and is a violation of law."

Share This Post

No comments yet, be the first.

Leave a Reply