So you have an idea. A business idea. You probably have thought of multiple ways to take action and bring this idea to life. But as many will agree, turning that idea into an actual working business is far more difficult than it would seem. There are without a doubt some important questions that you haven’t been able to answer, let alone asked yourself. We have had our fair share of fortunes and struggles when executing on a concept and thought we’d share our views on how to transform an idea into a business or more importantly, the questions you have to ask before taking action.
Learn from other’s mistakes
Why does a startup fail? I came across this great TEDx talk from Bill Gross a while back. I encourage you to watch the video if you find the time, it’s only about 6:40 minutes and he goes over what factors matter the most for startup success.
He believes, and I quote “The startup organization is one of the greatest forms to make the world a better place. But if it’s so great, why do so many fail?” He looked at 5 factors that influenced startup success; The idea, the team, the business model, funding, and timing. He quickly goes into detail about each one, that’s why I again recommend you watch the video. But be sure to come back though as we will discuss our own thoughts and insights in this article! The number one factor to startup failure he found, was timing before team/execution and the idea. I would bet that some people would think that funding would be the number one factor, but it came in dead last. Although this is a cornerstone to pave the way from idea to business, it’s not the most important. In his video, he goes into some examples like Z.com and YouTube.com.
Perform an honest market research
To build on his discovery, that timing is of the essence when starting a new business, performing an honest market research is very important before taking action.In our eyes, there’s a right and a wrong way of performing such research. Let’s use an example to explain both:
a. You have an idea to build a platform for the real estate industry. Brokers can now more easily find properties and sellers can earn more through it. Sounds great! There are millions of brokers around the world, this idea is bound to succeed!
b. You have an idea to build a platform for the real estate industry. Brokers can now more easily find properties and sellers can earn more through it. Sounds great! But, is the platform capable to operate all around the world, or are there laws that prohibit this? Let’s also think of the 2 target markets here. If you’re dealing with property, you have 2 interested target groups. The homeowners (sellers) and the real estate brokers or agencies (buyers). Does this platform help both parties involved? Because you need the two to agree on a set of terms in order to acquire the property. How are you going to target these 2 groups of people? Is there another similar platform out there? Are both parties willing to give up the traditional way in order to try and eventually use your system?
Take a wild guess on which one we believe in?
Most of the questions in point b. can only be answered by placing a prototype in the market. Start out with a basic, simple version to answer the most important question of them all, will the market like it? There’s little to no point in developing a very complicated and expensive solution if your target audience isn’t excited about it.
You see, pulling the trigger is easy. Aiming the gun is the hard part.
After you’ve decided on all above and made some important decisions, it’s time to take action. In this stage, there are also some important questions to ask. Draw out an entire flow of the project. Include everything and then try to split up everything in modules so you end up with the core business and what are essentially nice-to-haves. In the first section of this article, I explained the importance of knowing if your selected target audience is, in fact, waiting for your solution. Define your MVP (Minimum Viable Product) and try to bring that to the target audience as cheap as possible. Start with this core first. You can always add other modules later on.
After that, focus on user growth first. This is the most important factor in the success of many businesses. Users can generate income later on, or they can be added weight in the ‘scale-of-discussion’ with investors. You probably heard of a ‘lean’ or ‘agile’ way of work. This means you have to prioritize and need to be able to adapt quickly. Once the core is ready, go back and ask questions to your user base on what they would like to see next and weigh this against what you believe the right steps to improve are.
Always remember that there is a big difference between a good idea and the right idea. Do your research thoroughly and honestly. The business world is very much still fundamental though love so try to get as much help as you can.
A smart man (or women) learns from his mistakes. A wise one learns from the mistakes of others.