John Carlton, one of the most successful freelance copywriters of all time, said “The people who get the mostdone in life are all extreme risk-takers. They embrace change, because growth is impossible without it.” (This is coming from a man whose ads would out-sell staff-written ads for years.)
You’ve by now come up with a sensational idea for a start up. Something that hasn’t been done before (at least, not to your knowledge). You’ve done your research, you’ve figured out which loans you should get, and probably even managed to secure some startup costs.
You’re taking a big risk by developing your own start up company. Here are several ways you can immediately use to evaluate your idea to see if your risk will pay off.
1. Don’t Get Too Close
Throughout the development of your idea, as it comes to fruition it’ll grow on you. With good reason: it’s your baby, your prize, your obsession; falling in love with your idea, and the execution of it, will certainly happen.
Thus, begins the inevitable downfall of that idea.
When you become “warm” towards it, you’ll look at it subjectively. This makes you vulnerable (and more likely) to miss a step or make more mistakes – or constantly miss necessary steps for taking your idea to the next level. Hence the need for making flexibility your personal “mission statement.”
Your idea is not a masterpiece that will revolutionise the world – it is also (in all probability) not an original idea at all. However, what will be your masterpiece is the execution of your idea. During the execution phase, it’s tremendously more difficult (and time-consuming) to change course. Therefore, being as malleable as possible during the idea phase is key for minimising the potential damage from executing your idea.
2. Are You Solving the RIGHT Problem?
Startups fill a need in the world – this is the heart of business. The most successful businesses in history were those that solved a problem people didn’t know existed. Generally, the average customer is unable to articulate what exactly they feel they’re lacking. It is your job to figure this out for them by holding interviews and using everyday observations (This is how Target was able to calculate how far along pregnant mothers were – and then sent them coupons related to the term she was in.) It is recommended to hold 30-50 interviews (at least) to find out how “the real problem” of customers – and how your business idea solves that problem.
3. Are You Attractive for Business Loans?
Some startups get by without a business loans. However, those are the minority. For the rest of us, we simply need business loans to turn from business idea to reality. (“Swimming with the sharks” is the colloquial phrase best used to describe this nightmare of an ordeal.”)
However, not all owners receive the loans from investors they want. Lenders are businesspeople – and they make their money on the interest rates they charge you. If they see your potential business as profitable, they’ll lend you the money. If they see your business as a failure, they won’t approve you for the loan.
Make your business a lot more attractive by…
- Improving your financial health
- Have incalculable bookkeeping and accounting skills (or hire someone who does)
- Have 2-year experience in your industry
- Create a thorough business plan (without any “miracle cure” money growth schemes)
4. What’s Your Worth?
If you haven’t developed your unique value proposition (I like to call it “unique sales position” or USP for short), you are seriously missing out on becoming a staple in your industry. Here’s why: Since ideas come and go, your idea for a startup isn’t as important as the execution of your startup. The execution of your startup sets you apart from every “plain vanilla” business working on the similar idea as yours.
By far, the sure-fire way to separate yourself (“wheat”) from your rivals (“chaff)” is to hone in on your USP. Your USP keeps you in the mind of customers, and makes them think about your business whenever they have a need. For example, when I’m in the mood for stylish underwear, I’m not thinking about family-friendly Gap. I’m thinking about shopping for Calvin Klein – whose “image” is focused on out-of-this-world attractive, stylish men.
Other business owners may disagree with me on this next point, but I believe USP and UVP are interchangeable terms. Therefore, when you are doing your best to maximise your sales potential, you are simultaneously increasing your value – to both your customers, business partners and potential venture investors.
One way to judge your USP and its “sure fit” for your startup idea—is perform a week’s worth of research. I’m not going to insult your intelligence by suggesting that your idea is original – it most likely isn’t. (Which is okay – what truly matters is the execution of that idea.) Therefore, it’s crucial to spend a week researching other businesses—both big and small—in your town/county.
5. Gauge the Market
First of all: your audience (or market). This is the meat of your business – since customers generate sales, and sales keep your startup rolling. It is incredibly worth investing time into figuring out who the customers will be, and how big is the market opportunity.
The more you focus on going after the right market, the more sales you’ll see – from the kinds of people you want. What you want to do is create a customer “dossier,” which helps you target the right people. Ask yourself these questions – and then answer them honestly and realistically:
- How old is your customer?
- Who wears the pants in the customer’s relationship?
- How much money do they make annually?
- What’s their education level?
- What are their fears in life? (This will help you with solving problems and developing your USP)
- How do you want them to feel about doing business with you?
- What keeps them up at night?
- What are they most angry about?
- What negative emotions does your market want to move away from?
- What are their hobbies?
Conclusion
The road we must travel to transform our idea to a fully-functional business, is a journey that separates boys from men. Unfortunately, a lot of well-meaning entrepreneurs, minipreneurs and wannabes fall by the wayside a few years after launching their startup. By constantly evaluating your start-up, you’ll avoid the same fate.