What was the last great business idea you had? Do you remember it? What did you do with it? Did you write it down?
If you’re like most people, you had a great idea, never wrote it down, told a couple of co-workers or your spouse, and let the idea fade away without taking any meaningful action to pursue it. Or maybe you were worried about other people stealing your idea, so you kept it to yourself thinking you’ll pursue it later. But for most of us, that someday never comes.
Maybe you even went as far as laying out your idea into a business plan.
Whether you’re a seasoned entrepreneur or someone who has been eyeing a startup or side project to generate some additional income, good ideas often come and go like the seasons in the Midwest.
But what if they didn’t? What if you actually took steps to pursue your ideas and see if they were good?
According to sales expert and personal development guru Brian Tracy, “The average person has four ideas a year, which if any one is acted on, would make them a millionaire.”
Today’s post is going to give you a step-by-step guide to validate your business idea and potentially turn it into a revenue-generating business.
Here’s a step-by-step process for you to follow:
1. Decide You’re Willing to Go for It
It’s safe to assume you have had more than one idea about how to start a business or generate a new stream of revenue, right? And why? To help you save up for the down payment on your house, finally leave your 9-to-5 job, turn a hobby into a business, create some financial peace of mind, or take that dream vacation to Europe.
Just for a moment, grab a pen and paper and list 10 reasons you didn’t pursue your last great idea. Once you have 10 reasons, return and keep reading. Your list might look something like this:
- Don’t know where to start.
- Don’t have enough time.
- Don’t have enough money.
- Making money is hard.
- I don’t know how to write a business plan.
- I don’t deserve to be rich.
- I don’t have the right skill set to turn my idea into money.
- Couldn’t compete with the (major) players already in the market.
- Concerned about what other people would think of me.
- Fear of failure.
- Timing in my life isn’t right, I’ll do it later when XYZ happens.
- I’m not smart enough.
- I’m too old, it’s too late to start.
- I’m too young, people won’t take me seriously because of my age.
- Things like this never work out for me.
You have just created a list of self-limiting beliefs.
Self-limiting beliefs are part of all of us to some extent, but it is important to recognize them and how they are holding us back.
Take a look at your list, or pick any item off the list above that you relate to, and ask yourself:
- How does this self-limiting belief serve me?
- What is the source of this self-limiting belief?
Now write out an affirmative statement in contrast to your self-limiting belief.
For example: It’s never to late to start. My age is an asset as I have more experiences to reflect on and learn from and I have had more time to build relationships that will help me grow my idea and business. I will use my age and vast experience to make my idea successful.
There are a number of reasons that hold us back, but the main reasons we don’t follow through and attempt to turn our great ideas into something more tangible are self-limiting beliefs, the most common of which are:
- Lack of belief in ourselves and our ability to execute.
- Fear of failure.
If you’re not willing to do a simple task of identifying your self-limiting beliefs and working to change them, you will have a hard time turning your idea into money. Decide you’re wiling to go for it, eliminate your self-limiting beliefs and charge on!
This first step in the process is the most overlooked. I can assure you, if you don’t identify and overcome your self-limiting beliefs, you will not be successful in turning your idea(s) into a business. Given the developments in neuroscience and the study of the brain in the last 10 years, it’s been confirmed these self-limiting beliefs get hardwired in our subconscious. Our subconscious controls 96% of our behaviors, so overcoming self-limiting beliefs and rewiring our subconscious minds is a crucial first step.
“Insanity is doing the same thing over and over and expecting different results.”
2. Do Things to Help Develop Your Mind and Idea
Once you’ve identified and overcome your self-limiting beliefs, it’s time to start pushing forward on your business and idea. All successful entrepreneurs are disciplined and have a high level of accountability.
Author and motivational speaker Jack Canfield suggests doing five things every single day to push toward your goal. It takes tremendous discipline to start a business or launch a product, so it’s important to stay focused, track your progress, and keep moving forward every day. Day by day, nothing seems to change, but with successful habits everything will change soon enough.
Be a sponge and soak up everything you can about your product, industry, competition, and technology that you can leverage to help grow your idea and accelerate your learning curve.
A few habits that will help you stay on the right path:
- Develop a burning desire.
- Find an accountability partner.
- Surround yourself with other like-minded entrepreneurs who will provide good energy and emotional support.
- Study and learn from others, be a continuous learner.
- Find a mentor: Spend as much time as possible around someone who has done what you are trying to do.
All too often, people get started on ideas and end up giving up too soon. Once you overcome your self-limiting beliefs, commit yourself relentlessly to turning your idea into gold.
Sixteenth-century Spanish conquistador Hernando Cortes burned his boats, signaling to his men that they would fight and win or they would perish as there was no tuning back. You must decide to fight and win, because you are sure to face setbacks and opposition along the way.
3. Market Validation
Think about this for a moment: How do you know you have a great idea worth pursuing?
You don’t know. There is no way to be sure you’re idea is a good one.
If you start to run into roadblocks in your transition from idea to business, you may begin to have doubts. Even if you’ve completed No. 1 and strengthened your self-belief, that still leaves room to doubt your idea.
So how do you figure out if your idea is worth pursuing?
The Lean Startup
The decades-old formula was to develop a business plan, build a team, and then pitch it to investors. The new-school mindset is the lean startup.
This favors experimentation and customer feedback over elaborate planning and analysis. Not to say there isn’t analysis happening, but the concept suggests relying (much) less on intuition or thinking we know the right thing to do and instead letting the customers and market guide us in the right direction. Although this concept is just a few years old, it is getting major traction in the startup community and beginning to be taught at business schools across the country.
One of the most important stages of the lean startup approach is market validation. What is it and how can it help you turn your idea into a business?
Market validation is talking to potential clients about their problems and pain points and getting ideas for how your idea for a product or service will solve them. The counterintuitive nature of the lean startup recommends this be done ahead of actually creating the finished product. You may have no product at all and want to validate an idea with your target market, or you may have a prototype to share with them.
The logic of the lean startup methodology says your customers will tell you what they want the product to do, so rather than you thinking up and building something you hope your customers want, instead you build something that solves the actual pain points of your customers.
In the process, you may learn you were traveling down a path and solving a problem your customers don’t care about, in which case you should pivot, ask good questions, and identify a problem they are willing to pay for. Alternatively, you may find potential customers who say, if you build that, I will buy it, leading you right into finding your first paying customers.
The benefits of market validation are:
- Identifies the true pain points of your customers.
- Clarifies your target market.
- Shortens your time to go to market.
- Reduces risk and investment by eliminating unnecessary features.
- Saves money developing products.
- Sell it before you build it.
- Helps build a customer base.
A lot of would-be entrepreneurs get stuck at this stage, because we’re not sure what do to or how to go about it. My best suggestion is to be an action taker and adopt a “ready, fire, aim” mentality. While there are some areas of business where you want to be a bit careful and analyze your decision and strategy, this is not one of them. Don’t obsess with getting your market validation right the first time.
Identify a group (target market) you think might be the buyers for your product or service. Then find ways to connect with them.
Not sure where to start? A quick refresher: Here is a step-by-step list and guide to market validation:
- Identify one or more groups of potential users for your product or service.
- Reach out to your target market via cold calls, emails, focus groups, surveys, and personal interviews.
- Analyze the results and decide whether you have identified the proper target market and if you are solving a pain point your target market is willing to pay for.
This is grunt work, but it needs to be done. The pain point your idea uniquely solves is your value proposition to your customers.
Kickstarter is a crowdfunding platform where you can do market validation. Kickstarter allows you to pre-sell your product. It allows users to leverage their platform, though every Kickstarter project requires a strong marketing push to spread the word. Kickstarter is a nice way to validate your business idea while reducing your risk and capital expenditures, allowing you to produce your product if and only if there are sufficient orders for it.
There is usually more than one channel, target market, or question to validate, so if your first attempt at market validation doesn’t confirm your idea or strategy is a good one, continue to test other ideas and target markets until you validate an idea, strategy, target market, or value proposition that you can move forward with.
Continue to validate until you have enough information to cross the idea and strategy off your list or the data suggest you’ve found a solution customers will pay for.
4. Value Propositions and Target Markets
Once you have gathered sufficient data from your market validation, it’s time to analyze what problem you want to uniquely solve for your customers. It might be that your initial idea was spot on, or more than likely the problem that needs to be solved is a slight variation of your initial idea.
Initially, it will most likely make sense to serve only one niche target market and to go deep into that niche before expanding to other customer segments. It will also help you reduce risk and leverage your potentially small marketing budget to focus on a smaller target market initially.
Be crystal clear on what your value proposition is for the customer segment you intend to serve.
If you didn’t find a pain point that your customers are willing to pay for, you should go back and repeat market validation until you have one. Do not be afraid to be niche. I see far more businesses make the mistake of being too broad and rarely see a business be too niche with their customer market or value proposition.
Still struggling with your value proposition and target market?
Another great tool available is the business model canvas worksheet, which can help you brainstorm to understand your customer segments and potential value proposition of your idea and business.
Depending on your product, anticipation of orders and access to capital, you may want to produce a small batch of your product and ship exclusively to your first group of customers. If done correctly, you should have identified at least a few clients through your market validation process.
Throughout this process, you should continue to talk to potential customers and listen to their feedback to continuously improve your offering.
Once you have your first paying customers, you want to be sure your business infrastructure such as operations, website, customer service, and business model are in working order as best you can.
I hope today’s post will take the mysteries out of turning an idea into a revenue stream. There may be specifics that are unique to your idea or market that are not covered here. That is to be expected. I started my first business nearly 20 years ago and have started nearly 10 businesses across different industries since.
If you are struggling with any part of this process, focus on the market validation to help determine whether your idea is capable of being a business. If you are struggling with the market validation, focus on getting a clear value proposition to solve a meaningful pain point for your niche customer segment and explore ways to differentiate yourself from the competition. Getting specific on your value proposition and a niche target market will go a long way to the success of turning your idea into a business or revenue stream.
Joe Sweeney is a social entrepreneur, committed to helping individuals and organizations grow and solve problems. Most recently, he was the co-founder and CEO at 100state, a nonprofit, startup community of entrepreneurs, educators, and innovators in Madison, Wis. Joe was recently named one of 53 entrepreneurs on Madison Magazine’s “M List: The New Who’s Who” for his work with 100state.