When we first have a business idea it sounds awesome. We feel that it can change the whole world. That’s the spirit. However, what we feel might not be true or realistic, unless proved otherwise. How do we determine that the great business idea we just got is actually a great business idea?
A business that will last for the rest of your lifetime must be timeless in how they operate and create value. What it stands for and why it exists must not depend on current or future external conditions but what it will achieve and what it will create must be relevant today, tomorrow and for the rest of the time.
However, it has to have a beginning. We just need to start somewhere. The beginning of course will depend on current market conditions, customer needs and customer behavior. If what we start today does not have relevance and does not create value, it’s impossible to survive. If it cannot survive today, it will not exist in 1 year, definitely not in 50 years.
To survive today, the business needs to be relevant today. It should also make money today. The money it makes can be small, but if it makes money, it makes money. People are willing to pay today. Will the customers be willing to pay next year? It’s a Yes, only if it can still be relevant and create value which makes a positive impact on customers, tomorrow!
Build an MVP
An MVP or Minimum Viable Product consists of the bare minimum set of features, functionality or services required for a business to exist. Building an MVP is often cheap and can be done within a short period of time.
Often we get lost in a lot of features which we think will become USPs. Not because it’s proven, but because we think they are. Instead of pushing a daunting list of features, trying to figure out what the customers would want, and delivering them can build clarity among customers.
It builds clarity into what the product or service really stands for and what core pain points it really solves.
Don’t over-kill it.
Experiment: Fire bullets
One of the many ways to validate if a business is relevant and would probably work, is to experiment. Experiments are low risk. They are cheap. If it doesn’t work, the impact is low and possible financial losses are affordable.
To experiment, we need to understand variants of the product or the service we offer and/or various segments of the target audience.
When it comes to a product, we could segment the target audience of a product based on age or gender. For example, a new beer manufacturer could segment its audience based on gender and age. Female vs Male, Above 30 years of age vs below 30, etc…
If it’s a service, it could be segmented based on occupation of the target audience. For example, the target audience of a financial advice provider can be segmented based on customer occupational categories. Blue collar vs white collar, engineers vs accountants, etc…
The goal is to pitch the same sales pitch to different segments and see how each of them converts. Or whether any of them converts at all. The data collected through these experiments will tell us what’s working and what’s not.
We could then go on to next steps where we put a high effort on those converting segments.
Even after a solid customer base is established, we should still break features and services further down. We could offer a single variant to multiple segments or multiple variants to a single segment.
Offering multiple variants to the same segments will tell us which features or services are most attractive. Whereas, offering a single variant to multiple segments will tell us which segment is highly likely to buy a particular variant of our product or the service.
Pitch your business idea to potential investors
It could be family, friends, business loans granted from banks, angel investors, venture capital (VC) investors, crowdfunding, etc…
Whatever it is, PITCH IT!
In my personal experience, It’s best If you can pitch to VC investors. They do it professionally and rigorously. They have years or sometimes decades of experience in assessing and evaluating business ideas and founders.
A serious preparation is required to pitch to VC investors. You will gain a deeper understanding of your business idea, why it’s relevant, your target audience, what value it creates and how it can be grown and scaled.
Venture capital investors are keen on ROI (Return On Investment). This will push you to figure out;
How the business can and will make money in the long run
How it will increase its value over time.
It doesn’t necessarily mean that getting VC funding will ensure the success or the failure of our great business ideas. However, it helps significantly to improve how we look at our business in the long run.
Never give up
You need to have guts when you’re up against it
Oscar Albeiro Figueroa Mosquera is a Colombian weightlifter. During his early career he failed many times but he kept coming back to compete in the Olympics.
After winning his gold medal in 2016, he became one of the most inspiring athletes and an internet sensation. Short videos on YouTube about how he never gave up inspired millions, including myself.
In the 2008 Beijing Olympics, he failed to make a lift in snatch category because he was unable to lift the bar from the floor. He failed in all three attempts and left the Olympics without having a final result.
Then he went on competing in the 2012 summer olympics, won 3rd place.
In 2016, after 8 years, he won the gold medal in the 62kg division with a total of 318kg.
His attitude of not giving up finally paid off all his efforts.
I have not failed. I’ve just found 10,000 ways that won’t work
Another well known example is Thomas Edison. In 1880, Thomas Edison patented the first commercially viable incandescent electric bulb. It was not him that invented the light bulb for the first time, but he made it practical for the masses.
However, it was not an overnight success. He had to try 10,000 times before it was a success. Not giving up worked for him.
Every successful entrepreneur in building great companies failed one way or another. What differentiates them from the rest is the attitude of not giving up. It’s not the only differentiator, but a key.
However, to build a lasting business, not giving up alone is not enough.
Know when to pivot or let go altogether
It’s something I never dreamed I’d be doing, making movies
Famous Hollywood actor Jason Statham was not an actor at first. He was known to be a professional diver. In 1990, he competed in the Commonwealth games representing England. He didn’t win a medal.
Soon after the 1990 Commonwealth games, he was offered to model for French Connection, Tommy Hilfiger and Levi’s. He quickly pivoted from diving and focused on modeling.
From modeling, he later moved into acting in Hollywood. Today, he makes movies with the highest paid actors such as Dwayne Johnson ( The Rock). One of the latest movies he co-produced is Hobbs & Shaw. His net worth is $90 million today mainly from the film industry.
The message is clear. Knowing when to pivot brings the best out of us.
We all know Starbucks for the great coffee they sell. In 2020, they were operating in 32,660 stores across the globe.
However, they didn’t start as a fresh-brewed coffee shop.
In 1971, they started as a company selling espresso makers and coffee beans. Current chairman of Starbucks, Howard Schultz fell in love with the coffee after a visit to Italy in 1983.
He was determined to pivot from selling espresso makers to selling fresh-brewed coffee in European-style coffeehouses. The rest is history.
Because Howard Schultz pivoted, now Starbucks is a global java sensation.
None of the great businesses came to life suddenly. They all went through a painful journey in which experimenting is the only option before breaking through.
Especially when we are starting a new business, it’s important to make sure our great ideas can actually be implemented.
Experiments are low risk, cheap and the possible losses are affordable. Therefore, before going big, let’s take a step back and experiment to build the business case first.
The nature of the experiments is that they tend to fail. However, there will be this one experiment which works and makes all the difference.
Until we find this breakthrough, we shouldn’t give up. People who do not give up and try one last time, actually tend to become successful.
While it’s important not to give up, it’s crucial to learn from what we do. We should use these learnings to make better and informed decisions.
It could be concluding the fact that an idea isn’t working and should be stopped, or it could be pivoting efforts towards another focus.