e all know the feeling. You are going about your daily routine when suddenly that big idea stops you dead in your tracks. Perhaps it’s for a new product, a new app, or maybe you just realized that an existing business or service could be run a lot more efficiently.
Make no mistake, you have just come up with a new startup idea. And it’s so obvious, you’re honestly surprised you haven’t thought of it before. In fact, if it’s as good as you think, it could be life changing.
But the thought of launching a startup is so daunting, you don’t know what to do next. Gone are the days of walking into a room full of investors with just an idea, and walking out with a check in your hand.
These days, investors want to see some traction, some execution, whether it’s a minimum viable product or even revenue. But that shouldn’t discourage you -- it should motivate you even more.If you just came up with a great startup idea, here are five things to do next.
1. See what’s out there
The first thing to do is a little bit of research to see what’s already out there. If your idea is truly innovative, then you want to make sure that nobody else is doing it because there is a pretty good chance that someone has already thought of your idea.
Now, if your idea is already out there, that doesn’t mean your dream is crushed. Your idea might be similar but have enough differentiation to still offer value, or you might be able to put a unique spin on it through a cool marketing campaign that will be able to acquire customers at a higher clip. Or maybe you can run the business cheaper and beat competitors on pricing. Perhaps someone is doing your idea inAustralia, but there is no one doing it in the U.S. What’s life without a little competition?
Another thing to check out is if someone has tried and failed at your idea. A lot of times, a quick internet search will yield a company that looks similar to your idea, but there’s no recent information on it within the last few years. That might indicate someone tried your idea and failed, which is a very useful piece of information. If this is the case, try and find the founder to talk to them. Learning why they failed could be key to your success.
Once you have an idea you really like, spending a few hours on Google is the easiest, least intimidating place to start, just to get an idea of what’s going on. You have absolutely nothing to lose.
2. Do market research
According to Small Business Trends, a top 10 reason that small businesses fail is due to “no market need.” If you are going to invest years of your life into a startup or small business, you better make sure there is a market out there, which means doing market research.
Now, market research is a broad term, but in general means finding out the opportunity in front of you. Who is your typical customer? How many are there? Thousands, millions, or billions? If it’s only thousands or millions, that could be an issue unless you are planning to sell a super niche product that your target market will pay a lot of money for.
Market research also means trying to gauge excitement for your idea. Maybe conduct a quick online survey online and see if people respond eagerly. Or make a post on Twitter or LinkedIn and see if people are excited about your idea through likes and comments, or can associate with the problem you are solving. Remember, startups rarely stay the same, but frequently evolve over time, so if you have a clear understanding of a common problem for a large group of people, you are on the right track. The market research phase also may be a good time to take a look at the broader industry your idea falls into. For instance, if you are working on a fintech product for banks or trying to invent some kind of new drug, then regulation is going to be something that can’t be ignored, and will be a constant factor on your journey.
3. Conduct some informational interviews
Now that you have done some market research, it’s a good idea to talk to some informed folks who can give you some honest feedback. While your parents and closest friends might like your idea, they may unfortunately be looking at it with a slightly biased approach (it’s not their fault, they simply love you too much).
Reach out to people that may be doing what you are doing to get some honest feedback. For instance, if you want to create the next big dating app, reach out to founders of some new but lesser-known dating apps. LinkedIn is key here. They will know what it’s like trying to get everything set up and the challenges of acquiring users. They can tell you what the road ahead looks like, which will give you a better idea if you want to pursue your idea.
Other good people to reach out to, are investors in the sector that your idea falls into. You will most likely be talking to angel investors because venture capitalists are too hard to get on the phone, but angel investors are just as good. They know the space and have likely seen a million companies come and go, so they will tell you right away what they think your chances are and what you need to do to succeed.
If an investor or another founder tells you that your idea stinks, don’t get discouraged. Founders of some of the biggest companies in the world were told at one point or another that their idea stinks, and chances are, you are going to hear more than a few no’s along your journey. But the great thing about angel investors and other founders is they are probably going to be pretty blunt with you, which will help you further shape your idea and make a decision on whether or not to pursue it.
4. Talk to your potential customers
We can’t emphasize enough just how important your potential future customers are. Again, to repeat the statistic from above, a top 10 reason for failure is due to no market fit. Startups that build products and services with their target customers from the beginning are going to be so much more successful than those that don’t. This means more phone calls, Zooms, and hopefully in-person meetings with potential customers.
This may sound daunting, but also may not be as hard as one might think. Sticking to the dating app theme, talk to some of your friends that use dating apps and see what they like or don’t like about current apps on the market. Are there any common trends you can identify? Or maybe you want to develop an app for freelancers. Go to a freelance co-working space and see if they will let you send around a little survey.
If you are designing a product or startup for business customers, try and meet with one of your target business owners. Maybe you can design a product or service around their needs. Then not only are you getting an early customer, but if your product is successful, they will likely tell other people in their industry about your business. The customer is paramount and you need to understand that from the get go.
5. Think about building
This is definitely the most daunting and overwhelming step on the list, so we would recommend doing it only after you do the first four. However, this step could also be where your idea starts to get real. As we mentioned above, if you are thinking about approaching investors, you’ve got to show them more than an idea.
Bootstrapping is perfectly fine as well, but one way or the other, you will need to get the ball rolling. That means thinking about building your product or service. Obviously, if you are a coder and planning to build an app, that is ideal because you can start to do some of the work on your own. But if you aren’t, you need a plan.
If your startup is an application, you need to find someone who can put together a bare-bones app for you. It doesn’t need to be perfect, or a finished product, but it should be able to prove out your concept. There are also white label services online that might help you cobble something together on your own. If you’re building a product, you need to find someone to make a prototype for you.
Maybe you can afford to put a little money into your idea to get that bare bones idea up and running. That’s probably the best option if it’s not too costly, but you can always trade a little equity, although if your idea is as good as you think it is, that’s probably the last option to resort to unless the person that helps you build your idea can also potentially turn into a co-founder. There are now websites that you can post projects on and lots of resources online and in the startup community. Building will undoubtedly be the hardest step of the five, but will also help you realize how much you want to pursue your idea.
At some point, you’ve got to take the plunge!
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