How to evaluate a business idea?
I propose using a simple business plan evaluation templates outlined below.
Answer these questions:
1. Can you identify and profitably serve 100 customers? 2 Can you find the cash to start this business?
3. Can you acquire customers in a sustainable way?
4. Can you execute, Le, can you transform the idea inm business?
5. Does the idea fit with your “Why?
Why I would recommend this list?
1. It focuses on customers
2. It focuses on cash
3. It focuses on sales
4. It focuses on execution and operations
5. It focuses on you
1. Can you identify and profitably serve 100 customers?
Remind yourself that the goal of a business is to solve a problem for a customer. How do you know that your business idea cam achieve this goal?
Your own beliefs and experiences can only go so far. Arte same time, you can’t possibly talk to thousands of custome and figure out what they want, and whether they will buy your product or not.
What is the right way to go about it?
Focus on a small set of customers, say about 100, evaluate you are able to solve their problem profitably, and then expand Do not think about the first thousands of millions of customs right away.
Facebook was created to solve a niche problem: How m enable college students to connect in the best possible way. In goal was not to connect a billion people. Once it nailed the problem of connecting college students, it expanded to de areas. At last count, it is close to serving two billion peopit.
If you are building a B2B offering, the initial targer could be one customer. Solve the problem for that one customer.
Siddhartha Agrawal (Wallsoft Labs) followed this approach when he built his product around one anchor customer wh making sure that product could scale to others later. This is the ultimate idea validation.
“We had an exclusive tic up with a customer before started. The customer was reasonably large, yet the deci maker was young enough to understand our way of working The exclusive tie up motivated the customer to help with the intricacies of capital markets before we system. Further, the problem we were wide problem, so even if our anchor customer beke designed de solving was an indust arrangement, we could approach other customers and not face a huge setback.