Launching Your Own Startup: Effective Method for Ideas Validation
So now you have a bunch of ideas, and you are asking yourself what’s next (If you don’t have a bunch of ideas for your startup maybe you should start by reading my last post 4 Steps to Finding Your Winning Startup Idea).
When we first created YourPersonalEconomist with Pascal Bedard, we knew that creating our own startup would be a great challenge, we were determined and motivated, and most of all we had plenty of ideas. However the process of choosing and discarding ideas was complicated and sometimes frustrating. You can’t do it all, you have to choose intelligently and wisely before starting. Even if you don’t really know which of them will work best, you have to marry the idea and do your best.
In a quest to being a better entrepreneur I took an online course called DO Your Venture: Entrepreneurship for Everyone founded by Harvard University. This course really helped us in our path to create the company and start the process with confidence. Part of the content of the online course pertained to the subject of this post: how to validate your business ideas when you want to be an entrepreneur. So today I want to boil down the knowledge and tools I learned in both the course and my personal startup experience.
The Simple but Powerful Matrix
The first step is to make the idea list shorter by cutting down the ideas that are not viable or don’t really appeal you. Take your list and evaluate each idea using the following matrix as a first framework.
Is it doable?
This is the first question you’ll answer to complete the matrix. It’s the mix between market and feasibility, so here we are going to focus on feasibility from the market perspective. For example, do you have access to the necessary technology to create your project? Does this technology currently exist? For instance, you may want to create a driverless car that makes deliveries but this technology is still at the trial stage in a few cities and is not legally accepted around the globe, so it won’t work…
Ideally, technology is already out there and you have easy access to it. Make sure you can financially (and psychologically) afford the whole process from investing on raw materials and technology to paying employees and distribution channels. It can take from months to years before being profitable; so don’t start without being sure you have enough savings to survive this whole time without revenue.
It is Worth Doing?
The second thing you may ask yourself is the market feasibility, in other words, would people be interested in your product? Is there money in it? Is it worth doing? To answer these questions you can look for advice in your close circle of friends and family to see if there is a demand, but you can also look at how the market is responding in the industry you are aiming for. How are similar companies doing? Are people paying for these types of products? How much money would you obtain vs how much money would you have to invest?
A good proxy to know if your idea will work is to offer your product to potential clients and ask if they would buy it. For example, my mother, who is retired from a successful auditor career, discovered that her true passion was bakery, more specifically healthy bakery. So she started making small cakes and offering them for free to her neighbors, ex-colleagues and friends to have a feedback on the product, guess what? People just loved them! When she started having the first sales she knew her bakery business could work because she had a good potential demand out there.
Can I Do It?
We already analyzed market feasibility by trying to know if the market has what it takes in terms of technology and legal permissions. Now let’s analyze feasibility from a much more personal point of view. What kind of knowledge and skills would you need to develop this idea? Which part of this knowledge do you have personally? Do you need someone else to develop your project? Remember that a startup is much more than just “the idea”, it’s also a company, so you will have to deal with marketing, social media, visibility, production, providers, customer service, competitors, accounting, etc.
With YourPersonalEconomist we created a project that fits our personality and also our skills. I graduated from business school with major in economics and international business, and I’m particularly passionate by marketing planning and creative projects. Pascal, owner and founder of the company, is an economist with large experience in university teaching, public speaking, financial and macroeconomic analysis, consulting, and currency trading. We knew we had the perfect mix to create the startup on our own. It has been more than a year and we’ve managed every single task of the company and even if it’s lots of work we love the challenge.
Do I want to do it?
Remember we talked about “Think passion” on the last post? Well, today, the last step is to make that idea list even shorter by asking your gut how it feels. Take a minute to answer these questions for each idea that you have written down:
- How does it feel when you think about it?
- Are you feeling excited or bored by this idea?
- Can you imagine yourself working on this project every day?
- Does it correspond to your values and personality?
- Is it something that you can do and is it close to who you are?
Remember this: a startup is both a good idea and also “a good feeling.” Don’t neglect how you feel about it even if “it works” in a rational way. If you do so you will end feeling enslaved to your own company instead of passionate about it.
In the end, you should have a very short list or one winning idea left, so it’s time to go for it!