First Steps to Starting Your Own Business
So you’d like to be an entrepreneur, huh? There are lots of things to think about before you start a business, and the very first is…how do you find a problem to solve? If you look at businesses that failed, you’ll find that they really never addressed a problem that people cared enough about to pay to have it solved. If you’re going to start a business, the first step is identifying a customer to find an unmet market need.
How do you do that? We all belong to groups. Are you a cyclist? An artist? A gym rat? A parent? All of these groups, if they are large enough and if you understand them, offer potential customer segments to serve. It is important to choose groups that you have access to, that are large in size, and that you are passionate about. Choose several groups as you’re going to want to start with a big list and then narrow it down.
Once you have identified the groups that meet the 3 criteria mentioned above, think about the problems that you face in those groups. Are there any issues that make you crazy? That you would pay ANYTHING to have solved? You’re likely not alone. There are probably many people in the group who face exactly the same issue. If you don’t have one of those issues, don’t write off that group as a potential customer segment. Start talking to people in those groups. Some of them are sure to have something that strikes a chord.
The one thing you should think about when you are making a list of unmet market needs is whether the need is just an idea or whether it is an actual opportunity. The key difference is action-ability. There are loads of issues out there, but in many cases, there is no way to actually do something about them. When you’re searching for a business, the unmet market need must be something you can actually provide a solution for. It is also useful to understand the difference between wants and needs in your evaluation. You are way more likely to get someone to pay for something is a “need to have” vs something that is a “nice to have” solution.
Once you have a list of unmet needs for each of the potential customer groups, with action-ability and needs/wants highlighted, you are ready to move to the next step. Talk to people in the groups. At this stage, there are particular people that you should reach out to in order to optimize your research. These people are called “Early Adopters” . They’re people who have the problem you’re thinking of addressing and know they have that problem. They’re also people who are trying to solve the problem, but are not really happy with the current solution and would be willing to pay to have a better answer.
The key with this stage is trying to figure out if you can come up with solution that is better than the one that currently exists. And not just a little better. Research shows that the best solutions are exponentially better than the current ones. That means you solution has to be 10x faster, cheaper, stronger, lighter, better that what’s out there. That’s why you need to talk to people. You need to understand not only if the early adopters can help you refine the idea, but also if you can get to something that these customers will actually spend money on.
One of the ways to do this is to interview these people face to face (if possible). Your goals is to really dig deep on the problem and potential solutions. You want to validate your assumptions about your potential customers and the problems they have. Every assumption, from who your customer is, to what you think the problem is to how they are currently addressing the issue, to how you think your solution will work can be turned into hypotheses. f you ask open-ended questions, ask your interviewees to be brutally honest, and to try to prove your assumptions wrong, you are going to get some excellent feedback on whether or not your idea has merit.
The likelihood is that you’re going to get some answers that require you to pivot. Pivoting is part of the startup journey and happens throughout the process. Anytime one of the parts of your business plan model need to be changed because you have gained new insights through testing, that is considered a pivot. The most successful entrepreneurs have learned that if they hypothesize and test and pivot and hypothesize and test and pivot again, they can make the necessary adjustments before they spend a lot of money and time and energy. Testing and pivoting help cut the risk, and let you fail sooner and learn from your failures so that your ultimate product or service is that much better.
What’s cool about this is that the customer helps you build the product that THEY want. That’s why getting out and talking to the customer early in the process is so vital. It’s also why smart and successful entrepreneurs launch early and iterate often. In the old days, entrepreneurs waited to launch until they felt their product/service was perfect and then were so attached to it and invested in it (financially and personally), that they couldn’t change anything. In the new model, entrepreneurs launch with a Minimum Viable Offer – a prototype that helps you gather feedback from real customers quickly and cheaply. Again, the customer is the key to helping challenge and test so you don’t make any big mistakes. If your prototype or explainer video or landing page attract the people you want, you move forward. If they didn’t generate enough interest, pivot and try again. If you think of a stoplight, it is a great metaphor for how this process works. If you get validation of a hypothesis, you proceed to the next step (green), if you aren’t sure, you test more until you have the hypothesis either proven or disproven (yellow) and if the hypothesis is disproved, you pivot and try again (red).
There are loads more steps to becoming a successful entrepreneur, but all begin with the customer, and keep the customer front of mind through the entire process. Remember that, and the stoplight method and you’ll be on your way!
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