Potential clients often reach out to us because they are interesting in starting a business. We had such a meeting late last year. Recently we were notified that they didn’t want to go through with the startup. We had some time invested in the planning and mentoring session, but that’s not why we’re sad. We’re sad because a potentially great idea was left on the side of the road to die. But, we felt it necessary to write about this and put out some guidelines that may help others. This article will merge some of the methodologies we use when helping folks start their own business.
Validate Your Idea before Starting a Business
When people come to us with an idea to start a business, they have already sold it to themselves and seem unwavering in the reality that (a) it’s not that unique, (b) it’s not breathtaking, or (c) really? We try to be gentle in the delivery of our opinion, but it’s not easy.
The route we typically take is to help people validate their idea – with someone else besides friends and family. We recommend the purchase ($80) of a book by Wendy Kennedy, “So what? Who cares? Why you?” and recommend that they walk through all nine steps before we meet again. Her methodology is spot on when it comes to validating your business idea.
Talk To Potential Customers
Once you have validated your idea, we recommend talking to potential customers and walking them through your prototype or napkin drawing you completed in the previous step. Why? Right now, this is still your baby, and it’s pretty. You need to get more outside feedback so you can iterate through improvements. Notice that we haven’t told you to register your business or get a tax number just yet. You’re still in the validation stage of preparing to start a business.
It’s time to introduce the Business Model Canvas (BMC). BMC is a great 1-page solution that will help you document your potential business from various aspects. You may decide that this idea isn’t worth pursuing after all! The Business Model Canvas was developed in 2004 by Alexander Osterwalder. The block format covers these key facets to help you develop your idea into a business. Check out Pinterest for some completed Models that may inspire you.
- Customer Segments – Who are you creating value for?
- Value Propositions – What value will you deliver to your customers?
- Channels – How will you reach your Customer Segments?
- Customer Relationships – What type of relationships do your Customer Segments expect?
- Revenue Streams – What value are your customers willing to pay for?
- Key Resources – What key resources do your value propositions require?
- Key Activities – What key activities do your value propositions require?
- Key Partners – Who will be your key partners?
- Cost Structure – What are the important costs in your business model?
Final Thoughts
With these two recommended books and the value of your time, you have invested less than $100 in examining the viability of your idea to start a business. We wanted to share this knowledge with you so that you can make a better decision about your future as an entrepreneur. If you want us to review your idea and offer suggestions, contact us and we’ll be glad to help!
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