Pointers for founders to re-valuate their start-up.
Achal Chaursia Updates – Start Up
Is your Startup idea Practical?
We all have that hidden startup dream from our college days. You need to evaluate several different parameters and ask yourself before executing your idea and bringing it out on your investors’ table. If you are a serial entrepreneur who hasn’t selected their startup idea yet, or you are freaking out thinking that your startup isn’t good enough, you have landed on the correct page. A report by ,Failory says that 90% of startups fail for several reasons. If you look more closely, you will find that a thorough evaluation of startup ideas at an early stage will help entrepreneurs to overcome challenges in the future. This article will provide you with a step-by-step guide to efficiently evaluate your startup idea.
The problem (that you will be working to solve) is an essential aspect of any and every startup. Your product should bring real value to the people who face this problem. According to ,Kevin Hale from YCombinator, you should ask the following questions before choosing a problem wisely.
How Popular is your problem?
How Urgently is the problem required to be solved?
Is the problem a Growing one?
Is the solution to the problem Expensive?
How Mandatory and unavoidable is the problem?
Does your audience face the problem Frequently?
Your problem may not be able to answer positively to all the questions mentioned above. But even if your problem matches two out of the six attributes, it’s terrific. However, the more attributes your problem covers, the better it is.
Your problem should be the one that is faced by a large segment of people. Your target audience will help you figure out more answers to the questions to make your product even better. Start with selecting a bunch of potential users that face the problem desperately. This group of users will be the first one to adopt your product when it launches. They will also prove to be valuable in collecting feedback and iterating your product going further. Your target audience will be those who frequently face the problem and have an intense need to find a solution to that problem.
The most important part of your product research will be the solution to the problem. You can’t do much with this section at an early stage as you might only have an idea or outline of how your product will look like. You have to make sure that your product is designed solely around the solution to solve the problem. You can try creating a hypothesis around the “problem-solution” link. Your idea can be tested by creating an MVP and presenting it to your users.
Refrain from asking the solution directly to your target audience. Look beyond your customer’s expectations and try to come up with a solution that they might never be able to think of and that leaves them astonished. If it were soo easy to design a solution, then your customers would have done it themselves.
Also Read:– Important Factors In eCommerce
Competitor analysis helps you to shine out from the crowd in front of your investors. You can quickly evaluate your startup value by doing a thorough competitor analysis. Here’s a brief list of questions that you should be asking yourself for doing a meticulous competitor dissection.
Pay attention to how your audience solves the problem at present. This way, you will be able to create an exhaustive list of direct and indirect competitors.
Take a look at how these competitors solve the problem and compare it with your solution? Is your solution faster and more advanced?
Why is your audience using their product currently? Is it because they don’t have a better choice or they like the product?
What are the shortfalls and weaknesses of their product? If you can answer this question and incorporate their shortfall in your product, your product will be a boom in the market.
Competitor analysis makes you more precise on designing your product and what shape your product should take. This is because you will get a clearer idea of the problems faced and what your customers are looking for in the form of a solution. Your product should be able to bridge the gap between the problem and the solution currently in existence.
USP and UVP
There is a slight difference between Unique Selling Proposition (USP) and Unique Value Proposition (UVP). UVP is the value your product will provide to your customers, and USP reflects the exclusive benefits that your product will offer that your competitors can’t. Remember, UVP and USP evaluate your startup in a couple of sentences to your investors. So be as clear and concise in describing your primary value and competitive advantage.
Imagine your product is the perfect solution to what your audience wants. But they don’t know about your product. So how will your product reach your target audience? Your goal as a startup is not just to design a mind-boggling product but also to grow fast. By giving out your product to the target audience to use, you will know if your product is providing any value and is helpful.
If you know that the problem exists, you also know someone who is facing the problem. These people will be the first users of your product whose feedback will also help you better iterate your product. You can further strategize your marketing campaign according to your needs and finances. These can include digital marketing, SEO, paid campaigns, social media marketing, and promotional offers.
Bonus point: Create a product that your audience will promote in their network happily. This is the best way to know how impactful your product is and its value to your audience.
Revenue and Costs
You are not just building a startup to give out your product for free. Like every other human being on planet earth, you are here to make money. Hence, you should have a pricing model prepared for your product.
What will your users pay for? This will be your income.
How will they pay you? This will include your payment gateway system.
Don’t offer the product for free or at a discount of 50% or more just because you think that no one will buy your product if you sell it at its original value. If you sell your products at a fair price from the start, you will be able to test the value of your product. If your product is solving a problem that is urgent/ is faced by a vast community, people will surely pay for your product. Otherwise, it means that your product isn’t solving the problem entirely or the problem is not of perfect relevance.
Let’s Wrap Up
As an early-stage startup founder, evaluating your startup idea gives you a better understanding of your startup value and critical challenges. You will be going through a plethora of obstacles in your entrepreneur journey. But your focus should not be diverse from the end goal. Embrace your failures and take lessons from them. Learn to adapt and evolve with time to stay relevant. In the end, you will only cherish these memories while pitching your ideas to investors.
Author- Achal Chaurasia
A young businessman who has been in the line of entrepreneurship for quite a few years. He is an active learner and loves to know more about new technological developments CG up as well as how they can be put to great use to yield better results for the society.