There is no doubt that entrepreneurs are one of the most creative bunch out there. So many ideas being tested, so many boundaries broken every day. And so many issues to solve. One may think that it must be easy to identify THE best idea worth pursuing. You just need to be bold and start, some might argue. But how do you know when you are onto an idea that can change markets or the life of communities? How do you evaluate a startup idea?
There are many factors coming into play. This is a complex process which in some cases can take years of fine tuning. But let’s start with the first steps you need to make to get some reassurance your idea will be a success.
#1 – The type of idea
Is the market asking for this and no one has come up with something solid? Or is your idea so revolutionary that you’ll need to convince people to buy from you or partner up with you? I am sure you have heard this before, these are the two scenarios called market pull or technology push. There is also a third possibility as some ideas might be hybrid and that is OK. From the ideas we have encountered in the last years, most teams start somewhere between market push and technology pull. For all scenarios, the next step will be to identify what makes you unique and especially qualified to pursue this specific opportunity. Answer these questions and you have made a good step forward into accessing where you stand.
#2 – Good old fashion research
Continue with market segmentation and identify how your idea or technology can serve potential end users. It’s imperative to start this process by focusing on your target customer. Next step is to do primary market research and to get genuine feedback from customers through interviews, user tests, and focus groups. Focus on qualitative research, so interviews and not surveys at this point. This is a crucial step into knowing if your idea is a good one for the particular market you are planning to launch on.
#3 – Beachhead market and total addressable market
Next on your agenda should be selecting one market from your market segmentation to be the first one your business will focus on. As you have limited resources and time, you’ll need to focus your efforts as it’s crucial to control this small market segment until you have sufficient resources to enter other markets. Next you need to start estimating total addressable market (TAM) in your beachhead market. This exercise will increase your team’s knowledge of the market and will give you a good understanding of what makes this market attractive.
#4 – Piloting and building a network
Once you’re confident enough and are able to create an MVP, the ideal next step is to test or pilot your idea. There are many ways to do so, such as being part of incubators, accelerators, regional initiatives or corporate partnerships. They are all great platforms to test your idea and better understand its potential. Most of these organisations have seen hundreds of ideas and startups and will know how to guide you. Whichever you choose, make sure you also start building your network at this point. Other startup founders, mentors, experts, scientists, professors, managers they all can support and make a difference in the later stages of your business.
Understanding if your idea is worth pursuing it’s not an easy task and most of the time you can never be one hundred percent sure. Finding ways to get genuine feedback and support can make a big difference and, most importantly, will give the confidence you’ll need to carry on when things get tough. Moreover, always trust your instinct. It will guide you when you’ll need it most.