5 Steps To Test Your Business Idea Before Investing In It [LEAN Start up]
It’s been a while since I wrote a business post and I am super excited about this one because 2018 is around the corner which I assume many will be finally kick-starting their business or re-branding for the new year. So, I don’t want to talk too much. Let’s get straight to today’s post.
Several weeks ago in class, we had a special guest in lecture who was a serial-entrepreneur and you know me, I was quick to network with him or more like I was disturbing him on LinkedIn until I was able to get my own one-on-one session to get inspired by his journey and achievements but most especially learn. You might want to get a pen and paper now….
He talked about LEAN start up/MVP and I definitely knew I just had to write a post about it. So basically, a LEAN start up or MVP (Minimal Viable Product) is a product/service made with the minimal amount of time. Using this process helps you test your idea as a start-up even before launching or investing a huge amount of money into the business.
A great example used by the guest lecturer was Zappos.com. The founder wanted to sell shoes online, however, before going out to wholesales to stock up, he would just take the pictures of the shoes at a store nearby, paste it online. When an order comes in and the customer pays up, he then goes buy the shoe, packages it then ship it out to the customer. When he couldn’t keep up with the huge demand, he then invested in buying it in bulk from the wholesaler.
He tested his idea, validated it then invested in it.
So, if you have a business idea, these 5 steps we are about to view together will help you avoid wasting time, money and having the wrong assumption. Even as an already established business, this method can still be very much helpful. Let’s get started:
- Create a user experience board: What is the business about, what will you be doing and how the customers will interact with this business. For example, let say we want to start a protein shake business for people going to the gym but based on weekly subscription and because there are already lots out there offering weekly or monthly subscription, you decided to let people personalised their package by choosing from your different flavours on the website assuming customers might get tired of just one flavour and would love to switch it up. Interesting right?
- Identify vital assumptions: Now, you have your plan and it seems like you are ready to hit the market once the fund is ready. Well, no. Now is the time to step back and identify any vital assumptions you’ve made. In this case, we’ve assumed people are interested in protein-shake in the first place, assumed they would subscribe, assumed they would prefer a weekly subscription than long-term monthly subscription, then we’ve assumed they would love the idea of choosing their flavour and finally assumed they would pay the price we want to sell it for.
“Validation comes from measuring the behaviour of your target audience, not informations gathered from general opinions”
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- Build an early product or sample of your product/service: I know you’ve been thinking, what if I am offering a service and not a product, well this stage will make things clearer. How do you build an early product? You can use two ways: Concierge MVP where you operate things manually for a while before actually setting everything up just like Zappos.com did. He set up the business website, wait for orders to come in, go out to buy the shoes then ship. Or, you can use the Smokescreen MVP where you have a front like the business is 100% ready and collect information/orders notifying your customers it would take a bit of a time to their order. Continuing with our example of protein shake. We can create a mock-up site requesting customers to choose the 7 flavours they would like from the options, then when it gets to the payment page, either make them pre-order or refuse payment and notify them it’s out of stock and they would be notified when restocked. At this point, the decision is up to you, however, what we want to know here is: Are people actually interested? and What flavour are people choosing? This will save you from manufacturing undesired flavour, save you money, energy and time. Few other ways to validate here are pre-orders, advance booking, email subscription, make a marketing video explaining your services and see how many people watch and take advantage of the comment section…
“Build something to measure your customers behaviour”
- Go semi-live: I call this going semi-live because you are not operating fully but you want to release a sample of the products based on your customer’s behaviour you’ve gathered so far. You might want to consider releasing a video on YouTube or doing a Facebook ads about it then monitor the stats (Views, Likes, Comments etc) or do a focus group, send to selected people to test and use your products or services for feedback.
- Review or Launch (Or both): Here is the final stage, take-in all the information gathered and you might decide to review before launch or just launch straightaway. Most of the time, I would recommend both just to be on the safe side if you are going ahead with launching. However, sometimes, this might just show you the product or service isn’t needed in the market at the moment and you want to consider something else or twist your idea around a little bit more.
Some ideas aren’t in the market, not because people didn’t think about it but because there is simply no demand for it.
This is a long post, I know. When I started TBP, I didn’t know the exact methodology however, I was very sure I did follow the stages vaguely which is why the website was open for sign-up months before actually pushing it out there. I still use this methodology up until today and I am glad I can share this little knowledge with you guys. Remember, 2018 is your year!
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4 thoughts on “Business Tip: 5 Steps To Test Your Business Idea Before Investing In It [LEAN Start up]”
Waoh, this a very fleshy and informative post especially for we, intending entrepreneurs…Thank you for this information. Can’t wait to put it into practice. Thank you!
Thank you for reading. Glad you find it helpful
I’ve been following your posts for some days now, it inspires me.thanks so much, genius you are!
Thank you for reading