In the beginning, there’s an idea. It’s how every inspiring story of entrepreneurial adventure begins. But the idea, by itself, is never enough. Ideas only become sustainable when they are transformed into a product or a business. And then developed. And marketed. And improved. Constantly.
Make no mistake, it is hard work. It takes courage, persistence and dedication.
How do you know if your idea is worth all that work? Test yourself.
Transfer your idea(s) into words and onto paper. Draw rough mock-ups of what your idea will look like if you can. This will force your idea through an essential first filter — you. Your head and your gut will work together and tell you whether your idea passes the first “sniff test.” If it smells like an idea with legs, this process will be fairly easy– even fun. It will get your creativity flowing, and you’ll get excited as additional ideas start coming to you.
Would you use this product/website? “Solve your own problem” is a common theme among entrepreneurs. Personally experiencing the “pain” or the problem that you are trying to solve creates a unique passion that will drive you like nothing else can.
Who else would use this product/website? Unfortunately, unless others share your pain — hopefully many others — your idea will not become a product or service. This is called “socializing your idea.” It’s extremely helpful for an entrepreneur who is excited and passionate about a new idea to test it with other people. Your ability to quickly and easily explain the idea and gauge the reaction and enthusiasm from other people will begin to tell you whether you have a product or business or just a neat idea.
It is important that you understand the distinction between an idea that is merely interesting from an idea that will create a business. The most obvious difference between an idea and a product or business, of course, is that an idea doesn’t make money until it becomes a product or business. And if your idea doesn’t make money, you can’t pay the rent, buy groceries or go to Applebee’s for dinner.
Figuring out which market your idea fits into
An important concept for startup companies is “product-market fit.” Anyone can make a product, but unless it fits into a market that wants it or needs it, money won’t change hands and there won’t be a sustainable business. The only way to learn whether you have a market for your product or service is to talk to potential customers — the market — about your idea.
“Unless you have been working in a particular market for the past 20 years, anything you’re thinking about customers and markets are nothing more than a guess,” Stanford professor Steven Blank says.
“The first step is go out and test some of the fundamental hypotheses that you have about your business. There are two that are absolutely essential: One is that you believe you’re making a product or service that solves a problem or a need that a customer has. Great, I’ll believe you. Now show me that there are customers out there who have agreed with you,” says Blank, who is author of “Four Steps to the Epiphany.”
The reason to talk to customers early in the process, of course, is to see if anyone needs or even wants what you are building. It seems so simple, but when you start by solving your own problem, you have a tendency to assume others have the same problem (or need).
Paul Graham started YCombinator to serve as an incubator for startup companies (the aspiring entrepreneurs get a little seed funding and a lot of guidance). People who are admitted to the program receive a T-shirt that reads: “Make something people want.”
The bottom line is this: People want to save money, save time and get smarter. These are “jobs” that need to be done. Customers buy products that help them get jobs done. Not all jobs are functional, though, like shaving in the morning or feeding your kids breakfast in the morning. According to the book “What Customers Want,” there are three different types of jobs that customers are trying to get done most often: functional, personal and social. Functional jobs sustain our lives (think food, shelter, fuel). Personal jobs need to be done to make a person feel better, smarter, more attractive. Social jobs need to be done to make a person feel connected to, and appreciated by, other people.
It’s important to consider all three types of jobs to be done. If you can help people do more than one with your product or service, you stand a better chance at succeeding.
When thinking about your idea in the initial stages, try answering the following questions to assess whether you have the making of a business or just a neat idea.
Will customers pay for your products or service? If you are developing a website or news service, it’s probably not feasible to assume readers will pay directly for the content. While there will always be a few sites that charge for content — or try to– the predominant business model for web publishing is free content. It’s a simple case of supply and demand. There is seemingly no limit to the supply of free content online. At the same time, the demands on attention continually grow. The result is people with less attention to give to ever-growing amounts of content. (Some people call this the “attention economy.”)
If not, what are other ways to fund operations? If you are developing a website or news service, the most likely source of revenue is with advertising, syndication or services. To generate revenue from any of these models, you will need time to grow an audience first, meaning you will likely need some money to get going. This is called “startup funding” or “seed capital” and can come from a variety of sources, including self-funding, borrowing from friends and family or angel investors. Will customers use your products or service? Launch a prototype of the website or service you plan to build. Then invite friends and colleagues to test it out and provide feedback.
It takes money to make money. Fortunately with digital media, getting a new idea off the ground takes a lot less money than it used to. Even if a WordPress blog is all you can afford to build right now, it is a great way to test the market and learn — as early as possible — whether you have the potential to build a business around your great idea.