4 Steps for Vetting A Product or Business Idea

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Is this you? If so, keep calm and don’t build anything yet.

So you have an idea for the next killer app or product?  Before you start a company, build a prototype, or do any marketing, vet the idea first.  Specifically:

Step 1: Identify What Problem You’re Solving

“People don’t want a 1/4″ drill, they want a 1/4″ hole.”

I would go one step further – why do they want a 1/4″ hole?  To hang up a picture? Why? To decorate their house? Why? To impress guests with their style? Alright, now we’re getting somewhere.

It’s important to understand not only what someone is trying to do in the context of his life, but also why it’s important to him, and how he’ll measure progress/success.

Step 2: Talk to Prospective Users

See if you can find 10-12 people that might buy your product.  Offer them an incentive such as a $25 Amazon gift card to talk to you for 30 minutes.  Find out what they’re currently doing to solve the problem at hand.

  • If they’re not doing anything, find out why.  Too much work? Too expensive? No time?  Explain your concept to them.  Would they use it? Why or why not?
  • If they’re using something else already, find out how they like it.
    • If they’re not happy with their current solution, find out why and ask what, if anything, they’ll do next to find a better solution. (Google it? Ask a friend? Talk to a family member?)
    • If they are happy, find out why.  What would cause them to change their mind?

Take notes during or immediately after each discussion and later summarize the themes.

Step 3: Research Alternate Solutions

If you heard of some alternate solutions to the problem from your prospective users, research them more.  Start with a simple Google search.  Things to consider:

  • Do they have a significant head start? (ex. they’ve been around for 2 years and have 50,000 Facebook followers)
  • How would your solution be different/better?

Identify the top 3 competitors you’d face and write down how you’d explain to a prospective user how your solution is better than each.

Step 4: Draft the Business Model

How will your business make money?  Some questions to ask yourself:

  • How will I find customers?  How much will it cost to get the first customer?
  • How much can I charge each customer?
  • What other costs will I incur? (staff and rent are likely the biggest – think about how many people you’ll need)

Create a spreadsheet and play with the numbers.  What are the 3-4 key numbers that really change revenue or costs?  Highlight those cells – they represent the key assumptions you’re going to need to validate if you move forward.

If it looks like you can generate more revenue than costs, nice job!  Sounds like you might be onto something profitable.  If not, stop.  Do not pass go.  Do not collect $200.  Move onto another idea.

Want help vetting your idea? Drop me a line.

 

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