Globally, more than 100 million businesses launch in a year. Sadly, more than 90% of them fail or shut down within a couple of years. And funny enough, the number one reason why startups fail is that they’re unable to match their startup idea/product/service with market needs. In other words, 42 million startups launch every year with the idea the market doesn’t need.
It is critical to an entrepreneur’s success that his/ her idea is valid and well-researched. So before you start investing and scaling your business, ask yourself if the world needs you. Let’s dive deeper into the best ways to search your business idea:
Find a problem
The best time to startup is when you can identify a problem that exists in the market. Not only does the problem exist, but there are no other reasonable alternatives to solving the problem. In this scenario, you have a massive advantage. The only question left to answer is – Can you solve the problem? If yes, startup!
To find out if the problem is substantial or not, you can search online on forums, discussions, social groups, etc. to measure hype around the topic. For instance, I browsed Amazon to check if there are enough books on starting up for students to validate my idea for a masterclass on “Starting Up for students.” I also checked for reviews on those books to analyze readers’ interests. I found plenty of evidence to support and further shape my startup idea.
Also, ask the target customers (individuals/ companies). Instead of guessing, it’s always better to find out from your future customers. Make a list and start surveying. With online tools for building surveys and reaching out to target audience organically or through paid ads, it is so much easier today to get feedback for your startup idea. Oh and don’t worry about someone stealing your idea (remember your concept is worth “zero” right now).
Disruption thinking (Are you the uber of …)
To explain in a phrase – Are you the next Uber or Netflix? Both these companies did not reinvent the wheel. They only changed the way their industry worked using technology at hand. There are so many examples of startups that used disruptive ideas to succeed and equally enough examples of ones who still failed. Ask me why disruptive startup ideas are not fail-proof? Because not all disruptive ideas are a problem that the market needs solving. Yes, finding a problem and solving it is still at the core of success. Doing this with the latest tech is your unique value proposition.
Identify future trends
Investing in emerging technologies by analyzing megatrend development patterns of the future is a win in the long run. For instance, Elon Musk invested in SpaceX in 2002 with a vision to send a common man into space and the human race to Mars. Back in the days people thought this was crazy, but today, SpaceX has shown the world that a more significant vision can lead to unimaginable possibilities. Investing in the future requires funds, so this method works well for those who already have access to funds.
Business Potential of your startup idea
Evaluating the business potential of your startup idea will give you truthful facts and figures (not just an imagined story) to make your business. Key points to focus on while assessing business value:
- Market size – Investors want to know how big your market is. It’s best to figure out demographics according to regions, age groups, ethnicity, and more if you can. It will further aid you in forecasting financials as accurately as possible.
- Shrinking market vs. growing market – You don’t want to startup in a market that is likely to die in a few years. For instance, Nokia continued to invest keypad phones even though the market was shrinking, while Apple and Samsung understood the growing market needs for touchscreen phones and capitalized on it.
- Market push vs. market pull – It’s safe to say that business ideas that aim at markets that exist are easier to implement than for those that don’t. For example, Samsung and Huawei pushing foldable screens, for which currently, no market exists. Such companies, with massive investments and brand value, can afford even a market push strategy. A market push strategy can be high-risk for a startup, on the other hand.
You are on the path to success with the above four strategies all applied together to validate a business idea before investing capital. Also, you minimize risk wherever possible and are in a position to draw accurate business models.
Remember, a failed idea is still better than the invalidated one!
About the author:
Nitesh Marwaha is the Founder and Lead Instructor of Startup Masterclass.
He is an innovator and entrepreneur with 10 years in business leadership. Experienced in all aspects of business formation, operation, finance, marketing and management. Visionary product developer with deep knowledge in research and marketing.