Do you have a big idea that you’d love to turn into a business? Don’t quit your day job just yet.
A better approach is to test that big idea first, and see whether there is actually a profitable market for it.
A lot of time we get emotionally tied to our big ideas. Some people become so convinced that their idea will make lots of money, or change the world, that they invest far more time, and money, than they should. If you’ve ever watched ABC’s Shark Tank then you’ll be familiar with the aspiring entrepreneur who has invested hundreds of thousands of dollars of their own money (if not more) and years of time, without producing any significant sales or measurable progress.
There is a better way to launch your big idea, and it involves utilizing the lean methodology popularized by writer, consultant and technology entrepreneur Eric Ries. Instead of quitting your job, burning all of your savings, and experiencing unprecedented stress levels on an untested idea – just simply test it. Use the “build, measure, learn” process as advocated in the Lean Startup process – all while you maintain your current job security. If your idea is a winner, you’ll know soon enough, and then you can make that jump to a full time entrepreneur.
Here is how to test a new business idea in three very simple steps:
- Establish an MVP: An “MVP” is a minimum viable product. In other words, a way of describing, “what the simplest form of your idea is that you can actually sell as a product.” When you create your MVP you also need to determine your prices (both to produce your MVP, and to sell it). Once you know these, you know your profit margins (at a basic level). You will then need to determine how you will ship your MVP. If you have answers for all of these: your MVP; the cost of producing and selling it, and how you will ship it, then you are well on your way to testing it.
- Create a simple website or social media profile to showcase your MVP: You need a place where people can go to learn about your MVP. This can be as simple as a basic website combined with several social media profiles. Your choice or method will depend on how you are shipping your product, but in most cases a simple website, with e-commerce capabilities, will suffice. The types of social media portals you choose to use will largely depend on the nature of your product. You want to make sure that you are using the social media methods that your customers use. As a result, you will need to think about your ideal customer – who are they, and where do they go online?
- Create a specific marketing action plan and then execute it: This is the most important part. You’ve got to take enough actions to get sufficient data. If you only take a couple of actions, and no one buys your product, you can’t assume that your business venture is a failure. The reality is that you haven’t done enough to even make that judgment. In my experience, having worked with many startups, both on my own account as entrepreneur, and as an advisor to others, I like to use a rule I call 100 / 1000: Make a list of 100 things you can do to market the product, and then execute that list of 100, and in the process speak with 1000 people about the product.
If you complete this method (100 actions to promote your product, and in the process speak to 1000 people) you’ll at least have data. It will take several months at a minimum but you’ll have feedback. This is invaluable. It will tell you whether or not your product is sticky, who is most interested in it, what marketing actions are most effective, what actions weren’t, and how you can improve them. You’ll also have a few customers so you’ll have feedback on your product itself. This is gold for an entrepreneur.
After you’ve received some feedback, you can then evoke the “learn” process of the Lean Start-Up Framework. You can make inferences and then change behaviors, all the while you are getting better and also making a little money. All of this can happen while you maintain your current job. After several cycles of “build, measure, learn” you’ll have a product or service that has been significantly improved, has an existing customer base, and generates revenue. This is when you make the decision about going full time on your business venture.