Procrastination seems to get the better of most people who say they have business "ideas" but have not executed on them yet.
Many reasons are cited from lack of funding to bad timing, but these are nothing more than excuses and symptoms of an epidemic known as the “Wantrepreneur”.
To quote wiseGEEK:
Wantrepreneurs are individuals who have the desire to be an entrepreneur, but have not yet attained that status. Sometimes referred to as "wannabe entrepreneurs," this type of businessperson may have some excellent ideas for startup businesses, but as yet is unable or unwilling to engage in the tasks necessary to allow the idea to translate into a viable and functioning business.
With the help of the internet and some initiative, you can test and validate a business idea in as little as 48 hours with minimal costs up front.
For instance, this blog, has been an experiment which we validated and built in less than 48 hours.
The key thing is not to spend weeks and months developing products or services that you haven't validated or tested with your potential customers, wasting a lot of money and time which could have been used to execute on the feedback you get from your potential customers to improve or even pivot on your original idea.
Before we give you the steps on how to validate your business idea in 48 hours (or less), just note that this works for most business ideas and even if the final business you're working on is more complex than most, you will find that it is far better to start off with a basic version of what you envisage and get feedback from potential customers on it before building further and fine tuning.
1. Discover Your Idea
Skip this step if you already have an idea in mind.
The idea you come up with in this step needs to be something people are willing to spend money on. Come up with a list of these to take through the next steps.
If you've hit a block in terms of coming up with ideas, then try the following.
Search Classified Ads for products or services frequently requested by buyers. You need to group these into specific keywords (e.g. Tablet, Baby Sitting, Handy Man, Health, etc.). Check which ones are popular and see if you can create services or products around them.
Review best selling products or services on popular e-commerce sites and see if you can't build something to complement these. A good example is smartphone accessories.
There are many other ways to come up with ideas, if the above two fail you could always look around your daily environment for products that you experience problems with and see if you can't build something better.
2. Customer Hunting
Two important things we want to validate during this step:
Is there enough potential customers for your proposed service or product?
Is the market growing or shrinking? How does it compare to similar markets?
For the purposes of this article, we will use the keyword "Android", the Google mobile devices operating system.
- First, we use Google Trends to search for the term "android" and other similar words ("iOS" and "Smartphone") to compare them and see how our keyword fares.
Based on our chart from Google Trends above, it is clear that our keyword enjoys very health search volume as compared to "iOS" and "Smartphone" although it can be said that searches for "Smartphone" have been stable over time.
- Secondly, to double check our keyword. We will use Facebook Ads to see how many people could we potentially reach on Facebook using the keyword "android" as compared to the other two keywords.
We could reach 1,58 million people living in Kenya, Nigeria and South Africa only using the keyword "android". This is quite good.
Using the keyword "iOS" we'd reach only 600,000 people in the three countries. Almost a third of the people we could reach using "android".
Lastly, if we used the keyword "Smartphones" we'd reach about 1,56 million people, slightly less than using the keyword "android".
With these numbers at hand, you now have an idea of how big your target market is and can start planning what kind of product or service you want to offer around your keyword.
3. How much are these customers worth?
You have the idea, and you also have a pool of customers who are interested in your "idea" (at this stage, interested in the keyword), but what is the value of this huge pool of potential customers?
Well, in our example we will start with the cost of the cheapest brand new Android based phone in South Africa, Kenya and Nigeria. That would be approximately $50.00.
Next, we find out or estimate how much (at the very least) an Android based phone owner spends on average each year to maintain and use their phone. This would include, airtime, app purchases etc. Based on customer surveys in Nigeria, Kenya and South Africa it seems the average cost is about $10.00 a month, which translates to $120.00 per year.
Now let's do the math (which will assist in pricing and determining if our idea can be pursued further):
Base Cost = $50.00
Annual Costs = $120.00
Customer Life Span (Before making decision on which phone to purchase next) = 18 months
Therefore, an Android phone's total cost of ownership (minimum) is:
Base Cost + (Monthly Costs * Customer Life Span) which becomes $230.00 over an 18 month period.
Now we have some perspective on pricing for our online business idea relating to "android". For the purposes of this article and exercise, it will be an information product.
Now, as a rule of thumb, multiply the value of each customer (as calculated above) with the number of potential number of customers (Facebook Ads, Google Trends) and you have an idea of how big the potential market is. Do keep in mind though that it is highly unlikely that you will reach 100% market penetration but if the resulting number is greater that $100,000, I'd suggest you go ahead to the next step.
Now it's crunch time!
Now is the time to validate whether people will buy your product or they won't.
Then create some Ads on Facebook (and/or Google) to drive traffic to this landing page which will succintly detail what you're offering and collect e-mail addresses, remember taht you're not selling anything yet and basically just gauging interest and gathering data. Also track how many people saw your Ads, clicked on the Ad, visited your landing page and converted (i.e. gave you their e-mail address).
Also, another method (which can be used jointly with the above method) is to ask a minimum of 10 people you know to send payment via PayPal for your not-yet-developed product / service to validate your idea, i.e. whether anyone is willing to pay for it or not.
NB: Please offer a refund option should you not follow through with delievery of your product or service. The idea is not to cheat people but to validate your idea.
If a few people send the payment and you gather e-mail addresses, then your idea is to a certain extent validated.
Well, this is now entirely up to you. You can persevere and build the product and fine tune it as you get feedback from customers; or you could remain a Wantrepreneur.
Alternatively, if you are in Johannesburg, South Africa and surrounding areas you can show your interest in Lean Startup Machine - Johannesburg for a more in-depth three day workshop into validating business ideas.
To learn more about Customer Development and validating your business idea, come to Lean Startup Machine Jo'burg.
Cover Image Credit: Pedro Belleza