Getting funding for a plain idea is going to be virtually impossible. Ideas are a dime a dozen, but unless you are able to convert that idea into a product/service… even a MVP, and unless you are able to have a plan on how you plan to scale that up, investors are unlikely to be interested.
How then, does a young, first time entrepreneur (perhaps without or very limited work experience) with an idea, get going? Here are some things that you can consider:
- Find some co-founders – 1 or 2 others who you can take along in your journey. Try selling your idea to potential co-founders. (Remember, an entrepreneur has to sell, sell, sell… not just to customers.. but he/she has to have the passion, conviction and the ability to sell the concept to others too.). When you look for potential co-founders, seek complementary skills… if you are not a techie find techie co-founders… someone who can build a MVP.
- Study the market – Speak to potential users every day… Understand what they will like about your product… See how you can further solidify your concept and make it even more powerful. Listen and be open to what potential users tell you about competition and WHY THEY WILL NOT USE YOUR PRODUCT. When customers tell you why they do not want a product, it gives you deep insights on what could go wrong in your business.
- Join an accelerator and participate in hackathons where you can get the MVP done
- If you are convinced that this is likely to be a good ‘business case’, then try and raise a bit of money through a friends & family round…. raise ONLY AS MUCH AS YOU NEED TO BUILD A MVP. E.g. if you need Rs.10 lacs… then perhaps you can raise it by getting Rs.50 thousand each from 20 people. Or Rs.25,000 each from 40 people.
All the best. Plan well. Do well.
(This was my answer to a question on Quora)
In a focus group, for evaluating the potential of an idea, your goal should be to test all the assumptions that you have for your venture. Apart from the concept itself, there will be several assumptions on the ‘business’ around that idea that you will need to validate (e.g. pricing, availability, brand personality, etc.)
Here are a few things that come to mind, that you could consider testing (of course the more you share your idea, the more specific our answers can be).
- How deeply does the consumer/customer feel about the problem that your idea is solving : The more pressing the problem, the more relevant your idea is likely to be for consumers.
- The concept – the power of the idea itself: Do the consumers/customers see the value proposition in what you offer?
- Do people like the way your idea delivers the solution: I.e. does the product work for the consumers/customers as you had expected it to?
- Look for insights: Listen to what people are telling you about the problem that your idea is solving. See if your product does a good job or a great job at delivering the solution. See if the response is a ‘nice’ or a ‘wow’ as these subtle differences will determine factors like conversion rates, adoption rates, usage patterns, etc.
- The business model: A business model is about ‘who will pay how much and to whom’. Each element of this should be tested in the concept test. i.e. are the consumers/customers seeing the value proposition as you meant it to be, how much are they willing to pay – is there price sensitivity, and if so, how much. (In the case of fremium products, this may not be relevant.)
Concept tests help you validate your assumptions with qualitative inputs from the conversations with relevant groups. (You have to be super careful to ensure that your group selection is accurate. Else you may get an inaccurate reading. E.g. if a particular profile of respondents do not respond well to the concept, should you try the concept with another segment – is a call that you may need to take depending on what you are doing.)
But when you want to quantify the concept and potential, you will have to rely on a broader quantitative research that covers a larger sample that is representative of the audience you eventually intend to address.
(This was my response to the above question on Quora)
There has to be a goal around which the resources, strategies and plans should be aligned. Of course, because you have a goal and a plan does not mean that everything will go according to the plan. That’s where responding to in-market realities comes in. And that’s why you need a goal and a plan to achieve that goal.
The plans and the milestones in that plan are your markers which allow you to assess your strategies as well as the goals and help you make adjustments in your plans as you go forward.
This was my answer to a question on Quora
Don’t worry about definitions. Do what is needed to be done for the business.
At the early stages of a venture there are several things that will need to be thought of and several things that will need tweaking and you will need to adjust your business plan a few times. E.g. you may have to tweak your product or value proposition or pricing or communication or target market or target audience or positioning or business model or business process …
The point is that there are several aspects of business that are variables that could need adjustment to make the business work.
As a startup, you have to be nimble to respond to what the market situations tells you. As a founder, you need to be alert and street smart to read the signals on what the market is telling you (market meaning not just customers… but any stakeholder that may be able to provide an educated perspective i.e. perhaps a vendor).
However, there is also the danger of changing direction too often and without adequate thought. Many startups run into the dangerous temptation of changing direction and strategy too often.
Often, at the first signs of the existing strategy is not working enough, entrepreneurs tend to get carried away and impatient and attempt too many different things without giving enough time for one direction/strategy to mature. In many cases it is a case of throwing the baby along with the bath water.
The danger in this is that while it seems like a lot of progress and course correction, the business, and more importantly the team, starts loosing focus and direction.
While it is possible to do course corrections, it is important that startups consider change in strategy and direction only after adequate deliberations.
Rajan Anandan, Managing Director – Google India and angel investor in more than 40 companies speaks about what he looks for in a start-up.
My response to a question on Quora:
I guess, this is probably not the only risky bet they took.
I would not have. Hopefully, it pays out for them. I am sure they are also well meaning and sensible folks who thought deeply before taking this bold decision. No, I am not endorsing that decision. I believe it was reckless and irresponsible. Even if it eventually pays out, I think it is speculative and not worth the risk.
More importantly, on the UI and the product – I don’t think that houses are bought on the basis of maps. Buying or renting a house is a visual experience and a family would be willing to go with any area within a certain radius, if they like the house. Instead of spending 1mn USD on a domain, I would have spent my money on getting consumer insights and a great team to ensure a superlative visual and immersive experience for users.
How well you are doing as a company is really not dependent on benchmarking versus how others in the same space/stage are doing. Each company may have chosen a different path towards similar goals, or it is also quite possible that the goals and aspirations of the companies could be very different.
Hence, how well you are doing or not doing, is to be evaluated against what your own plans, goals and milestones were when you started the journey.
Not for one moment am I suggesting that you need to look at your original business plans as THE only road to follow. I have rarely seen any startup or early-stage company come even close to what their original milestones were in their business plans. Your original plans are merely a roadmap that you define to think through the different aspects of your startups journey. Once you hit the road, you have to make adjustments according to the weather conditions i.e. market realities. In some cases, the direction itself may have to be altered or changed all together. And it is perfectly all right to do that as long as it is a well-thought out plan, after taking into consideration all factors that may help you take a good and informed decision.
Therefore, if you have a well-defined business plan with your goals and milestones towards those goals well laid out, it should give you an indication of whether you are going in the right direction and at the right pace.
For your business, you need to identify what the key drivers are and that will give you leads on what you should measure your progress or success against. Each business will have its own set of key drivers or aspects on which success or failure will depend. Sales/revenues is usually just one of the indicators to measure the progress of a success of a startup. Other factors could be things like gross margins, employee efficiency, brand equity & brand familiarity within the relevant audiences, cost of customer acquisition, maturity of processes, proving of the business model, organization structure in place (or getting into place), key people on board, attrition rate, quality of contracts and respect of partners/vendors, etc. are all examples of indicators of what can be tracked to check if you are doing well as a business.