Not a day goes by without someone telling me that they have an idea for the next big thing. Now, it could very well be that those people are right. But nine times out of 10, they haven't done any research to actually determine if their idea is doable. Here are five questions for founders to ask themselves when deciding whether to move forward with a startup idea.
1. Has anyone done it before?
I've spoken about this countless times, but before you write one line of code, do market research.
Figure out if someone has done it before you. Were they successful? Can your idea compete with theirs?
Many entrepreneurs like to skip competitive analysis, but without it, the chances of success are zero. Your million-dollar idea might be awesome enough that many people have already done it.
2. Who is your target audience?
Great, so you have an idea. Now, who needs this product? If you can't identify and define your target audience, you won't be able to decide on features or how to market the product later on.
An idea is just an idea until you build it and someone buys it.
3. Is it a must-have or a nice-to-have?
This one is crucial. If you're building something that's just nice to have, by definition, it'll be less successful than something that is a must-have.
That's not to say that people don't buy things for convenience. They do. But perhaps consider slightly pivoting to add something to your product that people feel they can't live without.
4. How big is the market?
So, you've determined that the market is not too saturated and that there is a target audience for your product. Great. Now ask yourself how big that audience is.
It's simple math. Think about the unit economics here. How many products do you need to sell to achieve profitability? Is that a number you can achieve? If not, perhaps consider going back to the drawing board.
If you find that the market is too small and not enough people will buy this thing, well, you know what to do.
5. How much capital will I need?
This one is debatable. Think about your costs and your burn rate. How much money do you need to transform this idea into a business?
It's a chicken-and-egg situation here. You need money to build a product, but you need a product to raise money.
So ask yourself, can you build a minimum viable product with little capital? If not, you might find yourself struggling to keep your head above water with both time and money wasted.
An idea is just an idea. If you think you can just run with it without preparation, you're in for a wake-up call.
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