Many entrepreneurs often make the mistake of worrying first about getting financing to start their business and forget that in reality the first step is to invest time. In what or for what? For example, in evaluating the feasibility of the idea or investigating the various factors that can influence success or failure. That should be your priority, and if it is viable, then you proceed to seek capital to start.
It is common for one to think that their proposal is irresistible, that there are no similar products or services, and that future customers will buy the product or service without a problem. But that is not always the case. The reality is that many times new projects do not work because they do not meet a need, are more of the same or very expensive and impractical.
A prime example of this situation is with the company Webvan who had a lot of money but because they didn’t know their market, they went bankrupt. This company started operations in 1999 in the midst of the dot.com era, with a novel offer: online food sales. After three years, and more than 1.2 billion dollars in capital lost, the company declared bankruptcy. The basic error of Louis H. Borders, founder of Webvan, and his partners, was to create a project based on assumptions, and not on the needs and consumption habits of their potential clients.
When you are in the stage of ideation of your product or service, you must focus on the client and the market you expect to attend, so you can calculate its viability. Do not accelerate the launch for fear of others copying your plan. The value of ideas lies in their execution, and if you are the creator of the concept, nobody can do better than you. That is why you must do research before executing:
These are the aspects you should focus on before going to market:
1. What need, or pain will your value proposition meet?
Entrepreneurship means adding value. From this premise you must evaluate what your differential proposal will be with respect to your competitors. That is, what are the needs that generate pain in people and that are not being served by other brands. You must ask yourself what elements are missing to achieve a better sales and customer service experience? What novelty can I offer to differentiate myself? What improvement can I add in services, design, or comfort?
2. Who is your buyer?
Remember that you should not sell them all. Segmentation is a powerful strategy that will help you boost and position your brand. You must define the group of prospects of customers that you consider can buy your product. The buyer person is the best technique to define your customer, since it is based on the semi-fictional characterization of a person based on real data and estimates.
This person prototype is a mixture of demographic data (age, sex, social class) with psychological aspects (consumption habits, interests, hobbies, goals, frustrations and tastes). Prepare an interview and consult consumers of similar products to obtain some reference data. You can also send digital questionnaires or conduct surveys on social networks.
3. Look for powerful insight
Insight is a revelation, a reason for a deep observation and analysis of a problem. This allows us to have a new look to generate ideas or solutions. When you discover it, you are connected in a natural and direct way with your prospects.
Having insight is very powerful and will allow for rapid positioning. The insight will arise from the interviews you do, from the observation of the market and its consumers. Upon discovering it you can get ideas to enhance your proposal.
4. Know the market
After having a list of your potential competitors and creating your buyer, it is time to focus on knowing the dynamics of the market. Analyze suppliers, supplies, logistics, delivery times, credit system and regulations, among other aspects that will allow you to study all the variables and their impact on your venture. This knowledge will allow you to plan future estimates of investments, resources and income that are key in the initial phase of your project.
5. What are the trends of the sector?
If you are still not sure how you are going to differentiate yourself, then you should investigate the trends of the sector by going to specialized sources or references. You have to study the market you plan to enter, so you will reduce uncertainty and discover new opportunities. Innovation can be your ally to offer something different and turn the market around.
6. Start developing your proposal
After collecting as much information as possible, it is time to get down to work, and start designing your product or service. These are the first steps to create the Minimum Viable Product (MVP) with a small investment that will help you test its viability with your customer prospects. The feedback you receive from them will serve to improve it and go to market with a proposal that has already been evaluated and is accepted.
Do not forget that undertaking is a marathon, it is not a 100 meter race. Prevent anxiety or haste affecting your project. The important thing is to start, and with these steps you will begin to travel your path reducing the chances of the business dying early. Much success in your venture!