Is Your Startup Concept Any Good?
Anyone can create a business idea from scratch. However, the real challenge lies in recognizing great ideas from the bad ones. Which idea should you pursue as your business? Here’s a guide to help you figure out if your startup concept is worth investing time and money in.
Entrepreneurship is all about taking risks. As an entrepreneur, you need to take a leap of faith in the hopes that your business will succeed someday.
You could have a million ideas going in your head right now. But which one should you pursue? The last thing you need is to work on a business concept, only to find out that it doesn’t have any growth potential.
Nonetheless, don’t let this scenario stop you from taking a chance at launching a startup. It’s still possible to make a calculated estimate on how likely your startup idea will succeed or not. You need to validate that idea first before you move onward. These are the things to consider when assessing your startup ideas.
6 Ways to Validate if your Startup Concept Works
Is it a solution to a problem?
Does your startup idea solve a problem? It needs to solve a real problem that your target market is experiencing. If not, it would be hard to convince potential customers to look your way and buy what you are offering.
A startup concept works when you see a problem or gaps in the market which others may not have seen, and you know how to market a solution to that problem. Moreover, it doesn’t have to be grandiose as an idea to be successful. In fact, plenty of startups have achieved success by being forthright about delivering solutions to people’s problems.
At this stage, don’t worry about the product’s features and how to make money out of it. First, start with identifying the problems it is targeting. Write them down and ask other customers if they see them as problems, too. More importantly, ask customers if these problems are even worth solving.
From there, you can connect those problems with the value your product offers. Does it answer your customers’ needs? Will they feel better when using it? Are they willing to pay for this product? Answering these questions will guide you to validate whether your idea has an adequate product-market fit that satisfies strong market demand.
Does it target a niche?
If your startup concept can solve a specific problem, especially for a distinct group of people, it has a huge potential to grow. Businesses can’t possibly cater to everyone.
They need to target a small segment of the market. This ensures that there are enough people for which your product can serve. By tapping into a select target market, you may discover an untapped niche, even for unusual ideas.
Who are your competitors?
There’s nothing wrong with a little competition here and there. This could only mean that a strong market exists. However, it will be challenging to break into a saturated market or when customers are loyal to a popular brand.
Understanding who your competitors are is critical when launching a startup. You may not have control over your competitors’ performance. However, you can find a better alternative that justifies a reason for customers to switch to your brand.
To know how you stack against competitors, perform a competitive analysis. Doing so will help evaluate your competitors and their strengths and weaknesses. Additionally, it will highlight some missed opportunities that they have not discovered yet.
What is the value proposition?
Besides the features your product offers, you need to explicitly state its value proposition. Essentially, a value proposition is a statement that summarizes the value a company promises to bring to its customers. It shares the benefits that customers will get when they choose your products over the others. When you’re clear about these benefits, you can steer your product from the competition.
For example, Shopify’s value proposition promises that their software allows customers to start their online businesses anywhere. Additionally, they make it easier for customers to do business by handling their marketing, sales, payments, checkout, and shipping for them.
Whatever benefits your product will offer—be it cost savings, better quality, or faster transaction—your value proposition should link to the problems you’re trying to solve.
What is your business model?
Will your startup concept make you money? It should if you want your business to survive and grow in the industry.
A business model is a startup’s strategic plan to generate profit. It combines the value you promise to deliver and your money-making strategies. Hence, a successful business has a business model that allows them to deliver customer needs at a reasonable price and manageable cost.
Let’s look at it from an investor’s side. Before investors invest in a startup, they need to know first how it will make money. That said, investors who understand a company’s business model can have a better sense of its financial standing.
What do potential customers think?
This is the part where you get enough valid information from potential customers before making any decisions. Surprisingly, many entrepreneurs skip this part when validating their business concept.
Talking to potential customers will increase your chances of success. So, make sure to talk about your idea to as many people.
When interviewing them, confirm if they have a problem and how they manage it. Then, share your startup idea and ask what they think about it. The more realistic your startup concept is, the better it will be for potential customers to judge.
If you can, show them your product prototype or images of what the product will look like. If you offer a service, describe the expected outcome of your service should they decide to hire you.
Ideally, you also want to know how much they are willing to pay for your product or service. However, this can be tricky to get a reasonable price since everyone wants things for free.
What you can do instead is check out your competitors’ pricing. Based on that, decide how you will differentiate your startup from them. You can also take stock of the value that your product brings to customers; base your price on that as well.
If you already have a price in mind, ask them if they’re willing to buy your product at that price. Some may agree to it, while others will share what they think the price should be. Real customers know if they are receiving a great deal or if the product is overvalued.
It All Starts with a Great Idea
Now that you know the steps to evaluate if your startup concept is worth the shot, it’s time to take action. First, start by working on all the basics of your business plan. Then, confirm if your idea is good before you slide to the next step.
We encourage you not to take too much time crafting a business plan. The key here is to get out there, talk to potential customers, and test your ideas.
Remember, the world will always be teeming with business opportunities. It’s discovering which one is worth the investment. If you still need a little nudge to validate your startup idea, then talk to the experts.
Matt DeCoursey and Matt Watson are two of the brightest minds in the KC startup scene to mentor you before the big startup launch. They can show you the ropes on how it’s done, so it’s easier to bring your startup concept to life.
Also, they are the masterminds behind Full Scale, Kansas City’s unparalleled software outsourcing company. We offer all-in-one software development, project management, sales, and online marketing services for our most discerning startup clientele.
Interested? Get your FREE consultation with the Matts right now.