When thinking about creating a startup — whether it’s your first, fifth, or fiftieth — the majority of entrepreneurs begin at the same place — is my idea viable.
Certainly, a valid question that on its own can be hard to answer. However, there are few other questions that you can ask to determine if your idea is indeed valuable and more importantly sustainable.
Now, there’s no need to have every aspect of your business figured out. Part of the startup process is learning and building as you go. But the following five questions will help you understand if you’ve got something worth pursuing or if you need to think about it a bit more.
1. Am I addressing a need?
Really before you think about or do anything else, this is the primary question to ask yourself — does your idea bring some type of solution to a specific marketplace?
- Are you improving upon an existing product or idea?
- Are you fulfilling a gap in a market where there is consistently high demand?
- Are you bringing something new to the marketplace that will improve a customer’s life and provide something tangible for which they are willing to pay?
If you’ve ever seen the show Shark Tank, then you know your product or service could be anything — socks, lighting, video doorbells, even ugly Christmas sweaters.
It must, however, be something people want or need — even if they don’t yet know it.
The problem you hope to solve with your product or service is your square one, so to speak. It’s what determines the value of your idea, the opportunity for growth it may have, and the potential revenue it could generate.
2. How much money will I require to get started and where will I find the necessary funding for my startup?
The journey from idea to reality for some is a long one. For others, their product or service develops quick, finding relatively immediate success. The one common link in either scenario is that it took money to find success.
The early days of a startup are very much about survival. Knowing the amount of funding you must have — versus what you’d like to have — is critical. Only budget for or concern yourself with necessary expenses.
For example, if your concept involves selling products that could one day result in your having a brick and mortar store, it could be wise to first test those products by selling them online. Then, as you grow and prove out your business model, you can start to plan for the expenses that come with running a physical store.
The second question regarding funding is where do you plan on finding it. There is no shortage of cash sources — personal savings, bank loans, friends and family, crowdfunding, investors.
If you’re fortunate enough to find a backer with deep pockets, congratulations. The reality, however, is that funding will be tight until your idea starts turning a profit. You’ll need to confirm and reconfirm that your source or sources can help get you to that point.
If not, you will need to have contingency plans in place should one source of funding dry up thus forcing you to seek out a deeper well.
3. What does the marketplace look like?
Are you going to be the first in your niche and therefore must convince an unknowing audience that your concept has value?
Or, are you entering a deeply entrenched and competitive market where you’ll have to vie for market share with others?
Understanding the marketplace you’re entering will shape how you approach the development and marketing of your product or service.
For instance, take a look at the evolution of Apple’s iPhone.
When first introduced, few individuals could grasp the concept of the smartphone and Apple had to convince consumers it was a worthwhile replacement to the Motorola flip phones, BlackBerry’s, and Nokia’s dominating the market at the time.
Fast forward to today, and the smartphone market is more competitive than ever amongst companies like Apple, Samsung, and Huawei.
The lesson is to research the market, learn who the competition is, understand what they do well and what they don’t, and determine if your idea has a path to success.
4. What will make my idea unique?
Regardless of the type of marketplace you are entering, your idea, your company, your brand must be unique. Introducing a product or service that is indistinguishable from or not an improvement on existing concepts faces an uphill battle.
When answering this question remember that it doesn’t require any grandiose or high concept thinking.
- Does your idea provide more value and is less expensive than your competitors?
- Are you partnered with a charity or foundation that benefits from your business?
- Is your product produced organically or in an environmentally friendly manner that uses fewer resources than others?
Regardless of what it is, make sure you can separate yourself from your competitors and offer consumers an attractive hook that makes your brand appealing.
5. Am I ready and willing to do what it takes to succeed?
Finally, starting a business is no small feat. As we’ve already covered, from idea to funding to competition to the uniqueness of what you might offer, there is a lot to consider. It doesn’t stop there though.
As your business grows so too do the challenges, monetary and time requirements, the interaction with employees and consumers, and the risks and sacrifices.
Sure, you may not enjoy working for someone else, but your employment requires a very narrow focus. Even if your job involves several roles, you’re still only accountable for a finite number of duties.
As an entrepreneur and small business owner, everything is your responsibility — especially in the early stages of your brand’s growth. Operations, accounting, HR, customer service, IT, vendor relations — it all falls to you.
Which isn’t to say it’s not rewarding. Owning and managing your own company is the touchstone of independence, and provides both professional and personal rewards that working for someone else simply cannot.
But it takes a lot and requires a lot from you. Make sure you are willing to give what is necessary to ensure your startup succeeds.