How To Validate Your Startup Business Idea?
Business idea is the first step of establishing a start up business unit. From here, to move till this idea becomes a matured business entity lots of milestones are to be crossed and the terrain is not well known to most entrepreneurs. Some entrepreneurs successfully reach the goal and many do not. How do we validate that our startup idea is valid and strong enough to successfully reach the set goals. Unfortunately there is no formula type or text book based solution to help the entrepreneurs on this. Of course, many people will be willing to help and support but this is not enough and every entrepreneur has to discover his own unique method to pass through. Take the case of the successful business units and you are sure to observe that no business unit has succeeded in copying the management style of the other even in the same business segment. This is the first important point that entrepreneurs need to be aware of.
The purpose of this writeup is to make you aware the check posts you need to get through. The truth is you need to be honest to pass through these check posts else you will reduce your chance to succeed. The following are few salient points to be taken care as part of validating to achieve success of your business idea.
Assume you have a brilliant idea. First thing you need to pay attention is how do you convert this into saleable commodity or service . Next, we need to look at our product or service from the customer’s perspective. Will our product or service be able to draw the attention of the prospective customers. You need to have clarity on “Why should customer buy from you ? “ What is the edge you will be giving over your competitors.” Is the reason valid enough for customer to look at your offer seriously .You should have clarity to the answer for this question. Many entrepreneurs think they can sell their products / services to their customers because they can make the products to meet the requirement or they have enough social contacts. But , this is not sufficient reason to guarantee success in marketing. If you do not have edge over your competitors your chance of success will be about 30 to 50 percent by empirical statistics. So you should look at how to bridge the remaining gap to the success.
Next your access to the process of product making or knowledge of the services you offer. Is it a part of the management team or are you planning to hire these skills ? One note of caution is if you are the expert your chance of success does not guarantee 100 % success because your other roles to make the business unit successful will be diluted unless you have sustainable support for other roles required. However the exceptions for this could be domain professionals like doctors, lawyers, accountants, attorneys , consultants etc…
What is the strength of your management team ? You should be clear the meaning of “strength of the management team “ The strength of the management team is combination of three factors :The number strength of the team. The diversity of expertise in the team. The trust and gelling among the team members.
The next question to be answered is : How do you plan to achieve operational excellence. This again is a combination of three parts. “confidence in the process execution, sustainable quality levels achievable ,sustainability for growth.”
Next is the finance. Do you have financial strength to start and sustain the growth. The financial strength consists of two parts : your equity and external financial support you require. External financial support requires business plan with acceptable finance ratios and your confidence to meet these
All these things need to be documented as part of business plan. Please be aware that the business plan need to include many more points like strategic position, risk assessment, SWOT Analysis, Exit Plan etc. The business plan need to be validated and accepted by the stake holders.
With these steps what are your chances to succeed ? The success rate will become close to 80 % if you have a competent business consultant validate your business plan and also review the progress from an independent perspective and support you to carry out corrections wherever required as you progress.
The balance 20 % depend upon external factors outside your scope and skills and you have no control on this. 80/20 rule is an extremely powerful tool and require to be properly applied for growing any business.
