5. Estimate your market size
This can be determined using a top-down vs bottom-up approach. “For a business idea that’s brand new, you’ll want to start top-down by looking first at external research and market data,” David says. “This will help you decide if it’s an attractive, potentially lucrative market. Google is a great starting point.”
It will also help you understand how you stack up against the competition. Who are your direct competitors? How similar is your proposed solution to theirs?
6. Find your early adopters
“Who are the first 10 people who’ll use your product, business or service? Once you’ve identified them, find where they hang out, online and offline,” David says. Think places like Quora, LinkedIn, Facebook and Reddit – and don’t be afraid to jump into the discussion. “You can also create the community yourself.
For example, conventions or meetups, or creating online content such as videos and blogs can be really effective ways to attract and mingle with the right people.”
7. Build a business plan
There are many tools available for capturing a business plan, but Lean Canvas is probably the easiest one when you’re starting out, David says. “It fits all of the important information onto one page. That includes all the unknowns and risks, and things like USP (unique selling proposition), customer segments, cost structure and key metrics.”
8. Measure traction for your idea
Basically, traction is the speed at which a business can ‘capture’ what customers value about their product or service. “It means having to understand what you’re really selling,” David says.
“In a coffee shop for example, the real value could be time customers spend in the store. The AARRR framework is a great tool for identifying traction. It allows you to set clear goals in those critical first few months – such as number of customers, purchases, revenue and retention rate.”
9. Build a minimum viable product (MVP)
Just as with market research and validation, the main aim of a MVP is to learn from the marketplace. “Learning quickly is the key to winning the market,” David says.
“An MVP is like a ‘first version’ of your product, which can be very useful. Let’s say you want to create a new website for your business. It could be more effective to create a simple landing page with Google AdWords and see how it performs, rather than spending two weeks talking to customers. An MVP allows you to experiment with concepts and price points, measure market interest and get early adopters onboard.”
10. Grow, keep or kill?
Do you continue to see traction for your business idea, with it solving a growing number of problems for customers? In that case, you may need to switch from an MVP to a more scalable solution. Alternatively, if growth remains flat, it could still be worth keeping the idea in market, and focusing on optimising your branding and distribution.
“These are generally the two paths businesses will take,” David says. “The first question you’ll want to ask is: are we still solving the same problem we were when we started? And the second question: has the problem itself changed in any way since we started?”
“If you need to kill off an idea, consider transferring your customers to an alternative solution, while supporting them in any way you can through the transition,” David says.
Most of all, don’t be discouraged if the first idea doesn’t take off – that winning business idea is out there, waiting for you to bring it to life.
To learn more about how to pivot your business when times are changing, visit our free online guide.