Startups are hard. Really hard. But its worth it. The famous 90 percent of startups that fail is hard to believe. And it sounds horrible. But it’s the bitter truth.
Statistically, most startups fail miserably not because of the product or lack of passion but because there is no market need for their products.
You should be able to answer these business questions if you are serious about starting a business today!
1. What problem are you solving?
Inventors usually understand this one pretty easy: does human kind have a problem with hand washing dishes? Is this stated and commonly known? Then your automatic dishwasher idea of a product already has its customers.
You can’t have a business without customers or users. Even if they are not paying you right from the beginning but are interested in using your product or service, then you have a reason to give it all you’ve got (both time and resources).
2. Do prospective customers perceive this problem as important? And how many people think it’s a problem?
Since everybody is washing dishes by hand and everybody is complaining then it means you have a global problem. If everybody complains constantly about this and the complaints become bigger and louder, then this means that the problem that you have found is important.
Every product needs a growing market to success. If you want to be in business for as long as possible, don’t invest in a nice-to-have product, create a must-have-product. That’s the only way to build a successful business. Will your product still be relevant in the next ten years? How many people will still have the same problem in the next decade?
3. How well do you understand your customers’ problem? Do your product features solve this problem?
Let’s go back to the washing machine again. Are you sure you understood correctly the complaints? Aren’t people complaining about the water that wrinkles their hands every day? Or are they complaining about the fact that they have to wash dishes everyday?
How about the detergent that harms their skin? Take a good look and see if your product solves every problem they stated. If not, can you adapt your product so that it does?
4. If you’re selling to businesses, who in the company has a problem that your product can solve?
Let’s leave the washing machine for now and concentrate on something more contemporary. Say you are producing industrial sheets of white paper and you want to have a business-to-business selling channel.
Who do you contact in a company that is selling notebooks? The Acquisitions Manager, because you can offer him a financial solution to his raw-material issue, that will improve the financial outcome of the entire company.
My point is: identify and address your product to the person who has the problem, instead of his boss or subordinate, who don’t see a problem there.
5. How many customers do you need in order to be profitable?
This is a simple calculation you must make in order to find out when you will start to sell products and actually win money from their selling; it will also help you a lot in your investor pitch.
These are other equally important questions you should be able to answer as an aspiring entrepreneur.
6. Will you personally use you product?
7. Can you find 10+ people who are willing to pay for it now?
8. What do you love to do? How different is it from your idea?
9. How painful is the problem you intend to solve?
10. What is your revenue model and how realistic is it?
11. How well can the founders execute?
12. Can the founders identify what they need to do, beyond the obvious?
12. How does the customer addresses the problem today?
14. What is the recent trends that make your solution possible?
15. what is the simplest version of this idea?
16. How fast can you take the idea to market?
16. How soon can you build version one?
17. What makes your product different?
18. How much money is needed to build your first prototype?
19. Customers will only buy a simple product. Can you explain your product in one sentence?
20. Do you have any advantage over the competition?
21. Are you passionate enough about the idea to dedicate all your time for the next 1-2 years to it?
22. How easily can your get access to 2-3 high profile people who can advise you on how to succeed in that target market?
23. Can you convince 1-2 great people to work with you right now?
24. How soon can the you scale it?
25. How will it make the world a better place?
26. In what way is it creative, innovative and unique?
27. What opportunities and risks do you face?
28. What is the picture on patents?
29. What long-term goals have you set?
30. How is the industry developing (market growth)?
31. What are the key success factors?
32. Why should someone give you money?
33. How will your business survive and grow in the next decade?
You should always keep in mind that by answering these business questions, you are in fact finding various indicators that will help you outline your business model.
You will also have in clear sight the big picture and that will keep you on the correct path when you start overflowing with joy or disintegrate in sorrow.