So you think you’ve come up with the next great idea? Well, I hate to be harsh, but… so what??
The sad reality of the business world is that great ideas are a dime a dozen. What separates the great entrepreneurs from their would-be competitors is whether or not they’re actually able to successfully execute their visions!
I’ve been through the ideation and company creation process a number of times, and I’ve come up with the following system for getting started on great ideas. Depending on the specifics of your unique idea, you may not need all of the steps below or you might wind up tackling some of them in a different order. But whatever the case may be, I hope you find this process helpful when it comes to launching your next venture!
Step #1 – Define your idea
Telling me, “I want to start the next Facebook,” isn’t a great idea. It might be the start of something good, but as it stands, it lacks some much-needed definition. How will starting the next Facebook serve your future customers? How will you differentiate yourself from one of the best-known websites out there, and what will make customers want to flock to your site over Facebook?
Saying something like, “I plan to launch a social network that focuses on connecting 20-30 year old professionals with mentor opportunities,” is a bit more to go off of. As a general rule, when defining your idea, you’ll want to make sure all of the following questions are answered:
- What exactly will my idea do?
- Does my idea meet an underserved need or is it an iteration of a currently-successful idea?
- What user demographics will it serve?
- What value does my idea offer these users?
- How is my idea different than what my competitors are doing?
As you break down and refine your idea, I want you to keep one concept in mind – the idea of the “MVP” (minimum viable product). Instead of trying to cover every possible feature you could offer at first, strip your idea down to the bare minimum needed to launch. This will help you get out the door faster and saves you a ton of money in the process.
Also remember – trying to be all things to all people is an easy way to ensure that nobody will be fully satisfied with your product or service. Only when you’re absolutely clear with yourself on what your idea is (and isn’t) should you move on to the next step in this process.
Step #2 – Test your idea
You think your idea is great, but do others? And an even better question – will they be willing to pay for it?
Before you go any further with your idea, you’ve got to do some real-world testing. There are a number of different ways that you can go about doing it – including all of the following and more. Just keep in mind that the exact testing method that’s right for your idea will depend on a number of different factors, including the size/scope of your idea, how long it’ll take you to get it to market and how much you’re willing and able to invest in initial market research.
- Look for similar products – One of the easiest ways to determine whether or not there will be demand for your product or service is to see if competitors exist. While they may ultimately pose a challenge in terms of differentiating yourself, seeing competitors is a promising sign that people will be willing to pay for your offering. As a bonus tip, look to see if there are any Adwords advertisers paying to be on the keyword-specific SERPs where you’d like your idea to appear. If people are willing to pay money for these phrases, there’s a good chance they’re making money off the people who are entering these queries into Google (meaning that there’s likely a market for your idea).
- “Phone a friend” – Ask your friends and family members what they think about your idea. Although these people won’t be your most objective sources of information, it’s a free way to generate information. Be sure that any acquaintances you poll fit into the target demographics of the audience you plan to serve, and try to target your questions to those that are known for their brutal honesty. If you’ve got an Uncle Jack who starts up the political debates over Thanksgiving dinner, he might be a surprisingly great source of market research.
- Run a test ad – In his “Four Hour Work Week” book, author Tim Ferriss describes an idea testing method that involves running a website or magazine ad offering your product with a 6-8 week “shipping” lead time. If people follow through on your ad – whether by calling you with interest or by actually placing an order – you know you’ve got a willing market. Now all you’ve got to do is to get a product ready for them!
- Find a mentor – For this particular process, the best mentors will be those who have started successful companies in fields that are similar to, but inherently different than the one you plan to target. As an example, if you’re planning to start a fledgling social network, a mentor who’s formed a SaaS company could provide you with information about what it takes to launch a company and whether or not your idea is viable without running into too many conflicts of interest. If you’re concerned about confidentiality, consider putting an NDA in place before testing your idea against your new mentor.
- Traditional market research – If you’ve got the cash to spare, there are plenty of agencies out there that’ll give you the data needed to make informed decisions about your idea. Market research agencies can do everything from simple polls to in-depth focus groups. And while you may be able to carry out many of these functions on your own, keep in mind that a good agency will help eliminate bias from the research process. Left to your own devices, you may inadvertently wind up developing survey questions that give you the exact data you want to hear!
- Pay for research reports – Let’s say you want access to objective market research data, but aren’t able to invest in conducting your own surveys or studies. Depending on your industry and the type of data you want to collect, you may be able to pay for existing research reports that give you the information you need to test your idea. Googling for industry keywords plus “research,” “study,” or “report” can turn up a number of options that can be purchased for far less money than primary data.
- Test your idea on a small scale – if you plan to launch a national social network or develop an extensive software suite, launching a trial version to test the viability of your idea may not be possible. But what if you plan on retailing a small fashion accessory or launching a new consulting service? In these cases, you may be able to test your idea by selling to friends, family members and acquaintances before investing in taking your company to the wider market.
- Try crowd-funding – Once you have the specifics of your idea outlined, try tossing it up on a crowd-funding platform like Kickstarter or GoFundMe and see if it gets any traction. You’ll lose your project’s confidentiality (opening it up to clones that eventually surpass your own success), but you will have hard and fast evidence of whether your target audience is willing to financially support your idea as it stands. Just be sure to only use this strategy for product testing if you know you’ll be able to turn around a finished product to the people who back you within whatever window you specify in your campaign materials!
As a general rule, the amount that you invest in testing your idea should be somewhat proportionate to the eventual scale of your idea. In the examples described above, creating a test run of accessories and selling them in person or on a site like Etsy represents a fairly small investment. Creating a multi-product software suite, on the other hand, will be an expensive undertaking. Invest in the necessary market research up front to confirm that there’s a demand for your product before you commit your time and money to your idea.
Also, keep in mind that you aren’t limited to choosing one of these testing ideas. For example, you might start by polling your local acquaintances and then, based on their feedback, trying a test run or setting up a Kickstarter campaign. This might also be a good time to seek legal advice, depending on how much of your idea you plan to give away throughout the testing process. Having a lawyer advise you on how to protect your business at this stage can mean the difference between a successful launch and idea that’s ripped off by competitors before you even have a chance at it.
Step #3 – Identify necessary resources
At this point in the process, you should have actual, hard data that indicates that there’s both a demand for your product and a willingness to pay an amount for it that will ultimately make your idea financially viable. If your market research doesn’t turn up enough support for your idea, don’t worry! Plenty of great ideas turn out to be not-that-great once more data is collected. It’s now up to you to either iterate your idea or get started researching the next one!
But, for the sake of this process, let’s say you’re ready to move forward with your great idea. The next thing you must do is to identify all the resources you’ll need to turn your vision into a success. Be sure your planning covers all of the following categories, as well as any others that may be relevant to your business:
- Costs – including business licensing and registration fees, raw materials, advertising expenses, office space/equipment, employee expenses, design work and more.
- Knowledge – including necessary training, technical knowledge, employees that need to be brought on (whether as independent contractors or full, salaried employees) and mentors.
- Time – the amount of time and energy you’ll need to take your product to market (pay extra attention to this category if you plan on boot-strapping your idea while still working other jobs).
Don’t think about “necessary resources” in terms of money alone. If, for example, you need a logo created, you can either design one yourself (assuming you have passable graphic design skills or access to logo templates) or you can pay someone to do it for you. Both your time and money represent resources in this case – it’s up to you to figure out how to balance these competing demands.
As you plan out the resources you’ll need to launch your idea, be as thorough and as detailed as possible. Don’t guess that you might need $500 to have a decent logo created – get actual quotes from actual designers you might want to work with. Working off of bad numbers can easily derail your business if you wind up running out of money or find yourself without the knowledge needed to move your business past a critical hurdle.
You might also want to consider projecting your necessary resources for different growth models during this planning stage. Say you want to launch a SaaS product suite and hope to secure VC funding to do so. Having plans for how you’ll roll out your business if you receive $5 million, $1 million or nothing at all prevents you from being locked into unrealistic financial plans that could stop your idea’s growth in its tracks.
Step #4 – Secure necessary resources
Now that you know what you’ll need to get started on your idea, figure out how you’ll get it!
The exact way you go about doing this will depend largely on the resources you need. For example:
- If you estimate that you’ll need $10,000 in startup cash, you might take on an extra job, pull money out of savings, crowd-source your funding goal, look for small business loans, ask your parents to invest or solicit VCs and angel investors.
- If you know that you’ll need a competent developer to make up for your lack of technical skills, you’ll need to decide on a compensation scheme (independent contractor, full salary, ownership stake in the company, etc), develop a job description, advertise the position, interview candidates and select the right person for your company.
- If you plan to reinvest your initial earnings to drive company growth, you’ll need to develop contingency plans for paying your expenses (both business and personal) before you have paying customers, determine when you’ll pay yourself a salary and when this salary will replace your current or former income.
While I know that every idea is different – and that every idea, therefore, requires different resources – if I could give you one piece of hard-won advice, it would be to bootstrap your finances for as long as you can. VC or angel money can be tempting, but if you take it before you’ve proven your idea, it usually just causes distractions and issues that get in the way. Create a working business first, then look for external capital support to take your growth to the next level.
Is all of this planning boring? Hell yes! When you’re psyched about a great idea, sitting down and crunching a seemingly endless string of numbers is probably the last thing you want to be doing. But trust me on this one… I’ve seen enough entrepreneurs fail (and had enough failures of my own) to know that the better you plan for any and all contingencies, the better your chances are of making it past the risky stage of early company growth.
Step #5 – Create a “Launch To-Do List”
If you’ve gone through the first four steps of this process and you still think your business idea is viable (and you haven’t completely scared yourself off with the number of resources required), it’s time to put together the to-do list that’ll become your roadmap to launch success.
I’ve always found that the easiest way to do this is to work backwards. Imagine yourself at the moment of your launch, and then think about exactly what you would have done immediately before that moment to get there. Be as detailed as you can with the steps you cover and make a note of any resources you’ll need to complete them.
As an example, working backwards from the launch of a SaaS product might look something like this:
- Launch to all customers
- Final debugging
- Implement feedback from test customers
- Launch product to test customers
- Develop distribution systems
- Initial debugging
- Initial coding
- Wireframe SaaS front and back ends
- Narrow down list of features to include in launch
- Initial ideation
Obviously, this is pretty simplified – to function as a true roadmap; you’d want to expand each bullet point to include all the different steps and resources needed for completion. Store your complete to-do list in a program like BaseCamp or Zoho Projects and then periodically revise it as you go through each stage and identify additional work that must be done.
Step #6 – Set deadlines for your to-do list
One last thing that you absolutely must do before beginning work is to set deadlines for every major milestone you identified on your to-do list.
The thing about great ideas is that they tend to grow in size and scope as you go through the planning process. Maybe you start out with a SaaS product that’ll provide three key functionalities – but wouldn’t it be great if you could add these other two things as well?? This type of thinking can easily turn what should be a six-month development process into a year or more of work that delays your launch date (and, consequently, when you can start getting paid!).
Brainstorming like this should be part of Steps 1-4 of this process. Once you’ve decided upon your final to-do list, set deadlines and stick to them as closely as you can. You may even find it helpful to enlist an accountability partner to keep you on track or to use a service like StickK to help keep your timeline in check. Remember – you can always go back and add more features or functionality later on. But if you aren’t strict about sticking to your deadlines, you may never see your great idea actually come to fruition.
If you’ve made it this far in the process – congrats! It’s now time to start moving through the items on your to-do list and taking your concept from idea to actual, functioning business. Just don’t think that you’re done with the launch process. There’s one more important step you’ll want to keep in mind as you go along…
Step 7 – Refine your idea as needed after launch
Unfortunately, great ideas are rarely truly great from the get-go. If you have one of those, “one in a million,” ideas that turns you into a billionaire from the start, good for you. But if you’re like most people, your seemingly-great idea might require some iteration or pivots to become truly successful.
Admitting to yourself that things aren’t working can be difficult, but the key to true entrepreneurial success is to fail as quickly as possible, when necessary. That’s why it’s so important to check in with yourself periodically to see if you’re on track. If, back in Step 4, you told yourself you’d be taking a salary by six months in and you have yet to see a dime at the 12-month mark, it’s time to either adjust your product offering or to get out entirely.
Of course, there’s a big difference between an idea that could use some tweaking and one that’s never going to get off the ground – despite your best intentions. Figuring out where on this spectrum your idea falls will require both soul-searching and in-depth data analysis. Focus your investigation on whether or not your idea is truly providing value to users, but don’t be too optimistic where objectivity is called for. Making the call to shut down a business can be heart-breaking, but if you take what you’ve learned and apply it to your next venture, your odds of coming up with a successful idea become that much greater.
So what did I miss in this process? If there are any other crucial steps needed to take a vision from idea to successful business that you can think of, I’d love to hear about them below in the comments!