Joe Johnson, Ph.D.
Entrepreneur. Investor. Startup Expert.
Being too close to an idea can make it difficult to ascertain its merit with any certainty. For entrepreneurs dreaming up new ideas daily, the ability to differentiate viable concepts from wishful thinking is essential. Vet each new idea by following this procedure and prepare to survey potential customers to help determine whether it’s worth pursuing:
Grab a pen and paper or your laptop and begin by simply recording your idea. Prepare to brainstorm your answers to the following questions. As you work your way through the list, you may make a quick determination that your idea isn’t workable or that you need to alter one or more aspects of the concept. As you make those changes, be sure to run the revised version through the gamut of questions again.
What problem does your idea solve?
If your idea involves providing (as most do) either a product or a service, clearly articulate the problem it solves for your target audience. As we, as a culture, continue moving toward maximum efficiency, it becomes ever easier to lose sight of the basics. In an era of so many online accounts spread over multiple platforms, how is productivity actually affected?
If your idea involves a truly revolutionary (if you believe that this adjective applies, take some extra time for consideration; it’s a vastly overused term – almost always inappropriately) product or service, it most likely won’t solve a known problem. Nevertheless, you’ll need to justify its utility and determine how best to make your target audience aware of its existence and usefulness. For example, many so-called internet-of-things (IoT) devices help to reduce monitoring time and alert users to potential issues. They aren’t essential, but they make life easier for those who use them. In industries where compliance is required, IoT devices can decrease the amount of time spent on performing mundane tasks such as checking meters, thereby creating cost savings for the companies which utilize them.
Carefully consider the potential benefits of implementing your idea.
Whom will your idea benefit?
Having a target audience in mind is important, regardless of industry. “Everyone” is not sufficiently specific. Will your longer-lasting dish soap help housewives short on time? Will your productivity management tool help busy professionals to keep tabs on all of their accounts and thereby save them time? Once you have a broad notion of whom your idea will help, you can work to further hone in on your target audience.
Once that’s been accomplished, it’s necessary to determine whether those individuals would be willing to pay for your product or service. There have been many “innovative” products which have fallen flat in the marketplace because people didn’t find them to be as useful as their developers believed. Additionally, consider whether your target audience is large enough to enable your idea’s success. If the numbers don’t work, it’s time to return to the proverbial drawing board before wasting any further resources on an unwinnable campaign.
Has anyone tried this idea?
Entrepreneurs are idea machines. As such, there’s a chance that your idea has already been developed. Investigate whether others have tried to implement your idea and the results they achieved. Are there currently any competitors? What level of success have they encountered?
If others are currently offering a similar product or service, think carefully about your potential areas of differentiation. How will your product or service better solve that same problem for your target audience? How can you capitalize on those differences? Are they sufficient to render it a viable competitor?
Does it matter to you?
Launching a startup requires a high level of commitment. It’s much easier to maintain that dedication if you personally care about your startup idea. Are you invested in the idea and willing to see it through? If everything points to it being a viable concept, are you prepared to invest the time and energy required until it catches on in the marketplace? If not, this is likely your last, best opportunity to reconsider.
Is it marketable?
Not all ideas are profitable, even when they’re good ones. It can be extremely difficult to enter a market competitively. Before going too far down the rabbit hole, focus on how you intend to appeal to your target audience. How will you inform them of your product’s utility? Do you plan to cold-call HR managers as part of your B2B marketing plan, or will you be running geographically targeted Facebook ads as part of a B2C plan? How do you envision your sales funnel?
What’s your pitch?
If you believe that you may have hit upon a viable idea, consider creating a business model canvas to better explore your resources and objectives. You’ll also need to pinpoint how much capital you’re likely to require in order to launch your business, as well as how long it may be until you’re profitable. By filling out a business model canvas, you’ll be able to identify holes in your plan and address them before they become issues. Too many startups fail. By planning properly and thoroughly researching the relevant industry, you can mitigate your risks and improve your likelihood of success. Some risks are unavoidable – they’re simply the cost of doing business and must be accepted. Others are easily avoided with due diligence and caution. Knowing which is which – and acting both proactively and appropriately – is of inestimable importance. Solicit the opinion of every experienced advisor available to you and listen closely to their input.
In addition to your business model canvas, invest the time required to craft an elevator pitch. How would you explain your idea to someone without knowledge of your industry? Could you do it in two sentences? If not, you should refine your pitch until you can seamlessly explain your idea – and its utility – to a complete neophyte to your industry.
Can you test it?
If it’s possible to test your idea on a small scale, it makes sense to do so prior to expending an excess of time and energy. Determine the sort of test that might be required and how best to make it happen. How much capital will you need? Who will be your test subjects? If you’re thinking of selling gourmet popsicles, you might investigate the requirements for testing your product at a local farmer’s market. After perfecting your recipes on family and friends, who are (presumably) more likely to offer positive feedback, seeking out the opinions of paying customers will provide valuable, real-world information.
Positive results may offer the green light you need, while constructive feedback can send you back to the drawing board to iterate prior to retesting. When advice becomes consistent, it’s time to listen. If you keep hearing that your Chocolate Sea Salt Caramel popsicle is too salty, then it probably is.
Small-scale testing functions as a valuable indicator for the broader viability of your basic idea. Don’t skip this step!
Working your way through these questions is a useful means of determining an idea’s viability. While it can be tempting to forge ahead with a new idea and just see what happens, that’s an unnecessary (and possibly irresponsible) risk that can be readily mitigated by thoughtful planning and testing. This process doesn’t have to be lengthy. Depending on the particulars of your idea, it can take just a few weeks to flesh out and test your concept. Other ideas may require years of testing depending on their complexity. Utilizing a measured approach can help you to easily plumb the waters to determine whether you should move ahead with your latest notion, whether you need to alter it in some way, or whether it’s time to move on and focus on a different brainstorm.
Good ideas are plentiful – translating them into profitable startups is tougher. Your ability to assess and test your idea is a necessary skill to cultivate. Prepare to test numerous iterations and learn to enjoy the process. It’s all part of launching a successful startup.
About the Author
Dr. Joe Johnson is an entrepreneur, investor, and startup expert. He is the founder and principal of GoodField Investments and the GoodField Foundation (www.GoodField.com).
Joe has a Ph.D. in Entrepreneurial Leadership and an MBA. He is the author of the upcoming book on The Science of Why Most Entrepreneurs Fail and Some Succeed.
Most importantly, he is the incredibly blessed husband of one amazing wife and father of six wonderful children. He resides in Bradenton, Florida. For more information on Dr. Johnson and his work, go to www.JoeJohnson.com.