How feasible is your concept?
Ideas are a dime a dozen. Refining an idea into a viable product, and launching a business, takes much more than a concept. To succeed, you need to consider feasibility from three standpoints: product, business, and personal. What are your personal goals and objectives for starting this business? A clear vision and a sense of purpose are critical for building a successful and sustainable business.
Make the Go or No-Go decision in a specific sequence: market desirability, product feasibility, and business viability, with the final step determining the likelihood of reaching your personal goals for starting the business.
Will customers pay for your product?
The lack of product/market fit is the second most common reason for start-up failure. No customers = No business; no amount of passion, money, and competent execution will get customers to buy something they don’t need or want.
There’s no reason to move further down the founder journey until you’ve proven, through conversations with your potential customers, that your market exists. I’d urge any aspiring founder to digest The Right It by Stanford’s Alberto Savoia.
Be sure you’re not committing to “the wrong it.”
- “The Right It is an idea for a new product that, if competently executed, will succeed in the market.”
- “The Wrong It is an idea for a new product that, even if competently executed, will fail in the market.”
- “No amount of competent execution (brilliant design, clever engineering, impeccable quality, masterful marketing, or superior salesmanship) can save a product that is based on the wrong Premise.”
- “The more time and effort you invest in The Wrong It, the longer, bigger, and more painful your failure will be.”
Would you develop and build a product if you knew no one would buy it? Of course not, but you can’t say you’ll have customers until you do the work to confirm they’ll buy through personal customer interviews. If customers aren’t interested, make the no-go decision and move on.
Can your product be built?
If customers will pay for your product, you’ve already accomplished more than most first-time founders. Now it’s time to confirm that you can build it.
- Is it physically possible?
- Will you require manufacturing techniques not yet available?
- Do you infringe existing IP?
- Is it legal in your target market?
- Is it safe to use?
- Do you need regulatory approvals?
I often see founders determined to build a prototype or write the entire code for their product before talking with customers. Unless you’re confident you have a market doing so is a complete waste of time and resources. It’s better to know you have a demand for a product you don’t know for sure you can build than spend time and money prototyping a product no one wants.
Is the business viable?
Can you make money supplying your market? Feeling confident about getting customers and knowing you can build your product doesn’t mean the business is viable. Revenues alone aren’t enough. You have to know you’ll be cash flow positive.
It’s time to dig deeper by using your market knowledge and product costs to confirm the viability of your business. Relying on your revenue model isn’t enough. Use Alexander Osterwalder’s Business Model Canvas to assess viability. It’s easily understood and universally accepted by the investment community.
The Business Model Canvas allows you to visualize how your business functions and portrays the interrelationships between critical activities and needed resources.
Is this the right time for your product?
There’s much truth in the saying, “timing is everything .” Consider the current economic climate and whether significant changes or trends are happening in your industry. If the timing is right, act on it; if not, shelve it for now. It’s not uncommon to see products from the innovation graveyard return from the dead when conditions change.
Is this the right business for you?
Your motivations and goals are the glue that holds your program together and keeps you focused. Are your goals still achievable with the requirements of your business model? Pay particular attention to the following:
- Do the Key Activities needed to execute still align with your agenda?
- If you determined you’ll need to raise significant investment, are you willing to cede a substantial level of control to obtain it?
- Do you need to relocate your business closer to your target market? If so, is that something you and your family are prepared to do?
- Is the anticipated timeline longer than you expected?
- Are you prepared to work long hours for the next several years?
- Do you have the financial resources to survive without a paycheck for several months?
- Given what you know now, are you still willing to take the risk?
Business headlines focus on start-up successes but rarely provide a view into the long hours, stress, financial risk, and strained relationships that often make up the dark side of entrepreneurship. If your excitement has waned, move on to a better opportunity for you and your family.
The Go-No-Go decision is critical and yours alone.
Your decision to start the business impacts your family and everyone you’ve convinced to be involved. You want to get it right. Moving forward signifies the start of your founder journey. If you’re uncertain, don’t rush into it; consider the pros and cons from all angles before making a final decision.
These are a few of the dilemmas you might face:
1. You haven’t found customers interested in your product.
- It doesn’t solve their problem, or the problem isn’t painful enough to buy your solution.
- Over 95% of innovations fail no matter who developed them. Well-established companies all have graveyards of well-executed programs focused on the wrong products.
If, after talking directly to customers, you determine there’s no market, your decision is easy – it’s time to walk.
2. You confirm you’ll have paying customers, and your product can be built and sold at a profit. However, the business model requires activities far out of your comfort zone or skill set.
- Maybe you’ll need to relocate. Is that a realistic option for your family?
- Is the timeline needed to grow to a level that supports your lifestyle longer than your runway?
Your decision got a bit harder. Maybe you can find ways to mitigate or accommodate these conditions – research your options before making a final decision.
3. Your primary goal was to run your own business and call your own shots, but your business model shows you’ll need to raise significant outside investment to succeed.
- Outside money changes everything.
- If you fit the VC model of explosive growth, you should expect to lose control over sole decision-making by your second round of funding, if not sooner.
- Investors will continue to fund but on their terms, not yours.
Welcome to the control vs. wealth dilemma. If your concept requires explosive growth to succeed, the loss of control question is one you’ll have to accept.
An explanation of the control vs. wealth dilemma can get complex. Think of it this way; you’ve done a great job launching your start-up and convinced investors to invest large sums of capital. You’re growing your company at a rate that has outpaced your ability to keep up with the ever-evolving skills needed to remain at the helm. It’s in everyone’s best interest to grow quickly. It benefits no one to slow down the process or increase business risk. Only one in four founders remains as CEO at the IPO.
Hopefully, you’ll determine that your concept is desirable, feasible, and viable. If so, congratulations; your next step challenge is to design the organization needed to execute your model. You might determine that your concept isn’t feasible or is unlikely to meet your goals. Be thankful you worked to know that before going too far down the wrong road.