7 Steps to Making Sure Your Business Idea is on the Right Track

Date posted: August 11, 2017

By Ryan Kh

It’s rare that entrepreneur starts out knowing that their business is going to be worth billions someday. And for the ones that do make it big, it’s rare that the company they started on day one looks anything like the one generating top revenue now.

From long time corporate giants, like 3M, which started as a mining company, to modern-day tech companies like Pinterest, which started out as online shopping site Tote, there are tons of examples of companies that pivoted after listening to the needs of their customers and became more successful as a result.

But what if they started by listening to those customers first, and creating a company from day one that already met the needs of the folks they were trying to serve? Would that even have been possible?

Millionaire entrepreneur Sam Ovens seems to think so. In fact, the New Zealand-born founder of Consulting.com used this exact method to build his property inspection app, SnapInspect – which he created without any knowledge of real estate, application development or using his own money.

According to Ovens, anyone interested in starting a business today can do so and almost guarantee that their idea will be successful. How? They simply need to ask the right questions.

Crowdsourcing Your Idea

Ovens concept of crowdsourcing your idea ensures that you create a business or product based on the actual needs of the consumer, not just your own ideas. Once you can get the approval and buy-in from the audience, you have a much higher chance of success.

However, the concept of crowdsourcing can be tricky. As Jeff Howe, the journalist who coined the term in 2006 puts it, “I still think [crowdsourcing] can be an incredibly effective way for a company to cut costs or generate ideas, but right now, I think it would serve folks well to approach crowdsourcing with a little more skepticism.”

So how do you go about getting that idea and turning it into a full-fledged business while avoiding the pitfalls of crowdsourcing? Here are a few steps Ovens shared in his case study interview with Mixergy.

Identify Your Niche Audience

The very first step in building your business is identifying your audience. For many, it’s easier to focus on a business audience, because identifying the individuals you’ll need to talk to will be as simple as a Google search for their contact information. However, in today’s world of interconnectivity and online tribes, finding a niche audience of consumers shouldn’t be too hard.

Make sure your audience large enough to serve without you going broke, and that you have access to a sample size of about 50-100 persons via phone or in-person.

They should have also money to spend. One way to identify businesses that fit this criteria is checking which industry is hiring a lot. As Ovens puts it, “Who’s hiring if they’re going broke?” For individuals, general demographic data such as censuses will give you a good idea of disposable income.

Once you’ve identified your audience, start putting together a list of about 100 persons you can contact.

Contact Your List

Now it’s time to reach out to your audience and find out what their pain points are. While email is very prevalent these days (and definitely an option), phone calls tend to be a lot more effective in getting meaningful responses.

At this stage, you have no product and only a basic idea what you’ll be building, so you’re simply doing research into what are the most troubling concerns or issues affecting your audience. You can start by asking them to walk you through a typical day and highlighting any problems they have. Be sure to make notes during the call and review the highlights at the end to make sure you get a good grasp of their biggest concerns.

Having a list of possible leading questions is great, but don’t stick to a script so much that you miss an opportunity to get the right information. It might be something completely different than what you have in mind. Once people realize that you’re genuinely interested in hearing what’s bothering them, they tend to open up and share a lot more.

Look For Problems You Can Solve

From your conversations, you should have a good long list of pain points to review. This list will help you identify the problem(s) you may be able to solve.

Identify something that’s a pain for a significant portion of your audience and that you may be able to fix, whether with your skills or expertise in a certain area, or ability to create a team of people who have such skills. For example, if you can build applications, you might be able to create one for your audience. If you’re a writer, you might be able to research and create a guide.

If there are multiple opportunities, see if they can be combined. Otherwise, pick any one. You can revisit the others later. Also, be careful not to get sucked into the superficial or surface issues. Just because it’s bothering someone today, doesn’t mean it will a month from now, or that it’s a huge problem they’ll pay to have fixed.

Create The Solution (With Their Help!)

Now it’s time to figure out the solution. Without actually building a product, you now have the opportunity to outline on paper what the product will look like. Revisit your notes and check for the main concerns people had, and figure out what features your product can have to address those.

You don’t need to reinvent the wheel to make this happen. It could just be making changes to an existing product to make it more suitable. Lefty’s, the left hand store, thrives on making everyday products for left-handed people. Buzzfeed’s business model targets and subtly advertises to millennials who have all but tuned out traditional advertising methods – it’s really made for companies that were frustratedly looking for a way to capture that audience.

If you get stuck while working on this, be sure to reach out to your sample audience group for feedback and further advice. Building a relationship with them and making them feel as if they are a part of the process is key to your next few steps.

Sell It To The Ones Who Helped You Build

Now it’s time to prove the concept. This is probably the most difficult step, but it’s well worth it once you get the results. Once you’ve drafted your product concept and determined how much it will cost to actually build this product, it’s time to sell it.

But wait…you don’t have a product yet! You have no business, no website, no business cards…what are you selling?

You’re selling the idea, which not-so-surprisingly, people will be willing to buy if you present something they really think will help them get ahead and eliminate something frustrating in their lives.

Approach the audience you went to before, show them your solution and let them know that it will take a lot of money to get it built. Offer them a discounted price or additional benefits in exchange for them pre-purchasing or making an advance deposit for the first few months of subscription once the product is up and running. Even better, they get to be a beta-tester and have direct input into the product being built. How cool is that!

Sell It To Someone New

You’ve proved that you have something of value and people you are targeting want it, but these are the people who’ve been with you since day one. Will someone who has no idea what’s been happening be willing sold on it as well?

Once you’ve gotten buy-in from the group that helped you build your product, getting buy-in from a stranger will be a lot easier.

Call up a few members of your audience and pitch them the product as if it’s already been built and see what their reactions are. If they are excited and ready to buy, let them know that you are testing it out and give them the same offer as before, to get them onboard.

In your calls, be prepared for rejection. Not everyone will be happy about your product and some downright won’t care. Some will push back with reasons they shouldn’t buy such a product; it’s an approach we’re trained to take with sales calls. Simply be prepared with as many answers as you can, and if someone raises a valid objection, thank them for sharing and move on.

Build the Minimum Viable Product

Finally, you’re here, miles from where you started. You now have a solid business idea, a plan for creating a product, the money to build it and your first few customers. Now the work begins!

You’re going to be really enthusiastic about creating this product, but don’t try to do everything at once. Look at your full outline and figure out how to build the simplest form of your product first. Ask yourself, “What could we make at a minimum to get our product functioning to prove it is a solution to a problem?” This, in essence, is your minimum viable product, a key component in the Lean Startup Method.

In an effort to minimize costs, you should always consider looking outside your boundaries and learning new skills. A developer in India can cost one-third the price of one in the US, but do a good job at executing your vision with enough direction. Additionally, there are tools such as Keynotopia and Knack, which allow not-so-savvy folks to build their own database and visual applications from scratch. Of course, this route might take a longer time, but you’ll gain new skills that might be useful in maintaining your product in the future.

And that’s it! Not only have you built a product, you’ve already proven that it’s viable and made your first few sales!

Don’t be fooled into thinking that you have to build a full-fledged business with all the trappings before testing and proving your business idea. By ensuring that you are listening to your customer from day one and creating a product with their needs in mind, rather than your own, you can be certain you’ll find success in your business.

Ryan Kh is an experienced blogger, digital content & social marketer. Founder of Catalyst For Business and contributor to search giants like Yahoo Finance, MSN. He is passionate about covering topics like big data, business intelligence, startups & entrepreneurship. Follow him on twitter: @ryankhgb.

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