What does it feel like to have a terrible business idea? The kind where people laugh behind your back as you walk away? Take a moment. Think about it.
It actually feels a lot like having the world’s best business idea, right up until the market tells you that you don’t have anything anyone wants. I meet with a lot of founders that don’t have any idea how to figure out whether they have the world’s best or dumbest idea.
After starting a number of companies of my own, and meeting with entrepreneurs at all stages of the startup journey, I’ve come to believe that the ability to differentiate good ideas from bad ones and massage bad ideas into profitable companies is like being physically fit. The vast majority of us aren’t born fit. We have to train, practice and push ourselves to get good at it.
When I was in high school and college I completely ignored all forms of exercise. But I was lucky, I was a pretty skinny kid. People would always ask me, “Are you a runner? You look like one!” It happened so frequently that I came up with a funny quip back. I would say, “I run from danger! And nothing else!”
So one day I was walking my dogs and I thought to myself, “Self, if there was danger on this street, could you in fact run from it?” I decided to test my assumption and I took off running. I sprinted as fast as I could. I sprinted for two whole blocks until I had to stop and throw up. And after I was done, I thought, “Man, danger would have kicked my butt.”
That day I learned that it’s pretty easy to make bad assumptions. Just because a lot of people tell you something is true — that you look like a runner — doesn’t necessarily make it so.
Your startup idea is no different than my perceived ability to run from danger. The only way to prove or disprove your idea’s likelihood for success is to test your assumptions. And whether or not this current idea makes it, you’ll be developing the muscle memory to validate future ideas.
3 Tips on Reducing the Risk of Your Idea
Understand your riskiest assumption. First, create your assumptions. Whether you are using a lean canvass or a business plan, you need to lay out your vital assumptions about the business. To do so, you need to be able to answer questions about customers, problems, solutions, MVPs, competition, sales channels, supply, human capital, financials and legal issues.
Run an experiment to reduce your risk. There are elements you need to determine and document before you begin your experiment. And while this experiment framework can seem cumbersome, remember, it is your single greatest asset in reducing the risk that goes with creating something new.
Make a sale to at least 20 customers. Do you know the difference between a startup idea and a startup company? Paying customers. Early adopters are more commonly known as your first customers. Here are the five things you can do to find them: use every relationship you have; stalk and awe; accentuate the positive; create partnerships for credibility; become an expert.
Diana Kander is a successful entrepreneur and Senior Fellow at the Ewing Marion Kauffman Foundation, the largest nonprofit in the world dedicated to entrepreneurship and education. She is also a New York Times best-selling author, public speaker, consultant and writer and advises founders and Fortune 500 executives on her methodology for launching customer-focused products and services. For more of Kander’s entrepreneurial advice, visit her blog.
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