4 Steps To Figure Out If You Have A Valid Business Idea

4 Steps To Figure Out If You Have A Valid Business Idea

Starting a business is hard work, but it is not as complex as you might think. You just need to know which steps to take so you can figure out if your idea is a good one, which is crucial to getting started.

I have had the good fortune to start and scale businesses for the past 7 years — in Pakistan, Russia and recently in Australia. I am currently running a business accelerator program called Catalysr which helps migrants and refugees in Australia to start their own businesses, and also advising EnergyLab which is a CleanTech Accelerator based in Sydney.

Hence the steps and methodologies I share here are the ones that I have tested on myself, and also taught to other budding entrepreneurs

Why start a business?

In our global economy, where jobs are becoming more casualised and the competition increasing, there’s a massive opportunity for entrepreneurs to create their own jobs.

So let’s get into it and break it down to the basics. Follow along and you’ll be well on your way to giving this entrepreneurship thing a decent try. Who knows, you might even be successful!

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1. Find your Purpose! Be a hedgehog!

The first step is to figure out your purpose. And that helps you figure out whether your business idea is worth pursuing. Here’s what you need to ask yourself to do just that.

Image: Positioning Systems — Strategic Discipline blog

 

What are you passionate about?

The first thing about starting a business is doing something you love and are passionate about. Yes, you can open an online store and sell $10 pencil cases. But doing business is hard work, no matter what you’re doing, so there will be ups and downs. It’s important to do something that you love doing to keep you motivated. Ask yourself — am I passionate about pencil cases?

This awesome video by Simon Sinek on “How Great Leaders Inspire Action” will get you thinking about your purpose. Then you can start thinking about what your ‘why’ is — why create this business?

What can you be the best in the world at?

What are you bringing to the table that nobody else can? What is a skill set that has your name on it? It might be a bit of trial and error but if you think how you can play to your strengths you’ll probably enjoy it more and you’ll be good at it!

What drives your economic engine?

Finally, it is important to know whether it will make money if you want it to be a financially sustainable venture.

Once you’ve answered all of these questions, you’ll see that your purpose sits at the intersection of those three. It’s known as the hedgehog concept. Check out this article to get started on it.

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2. Listen to customers and solve their problem. Develop a product that helps create value

Now that you’ve figured out your purpose on a higher level, the next step is to think about customers and the problem you’re solving for them.

Why solve a problem?

The most successful businesses out there all solve some kind of problem and make people’s lives better. For example, Facebook solves the problem of wanting to know what your friends and family are up to, breaking down loneliness by instant connection to others, and also allows you to share your life with others. It is important to solve a problem, because that’s what makes people want to use your product or service as they need it to make their lives better, rather than an accessory.

Any problem that you’re trying to solve, will be for an end-user. So it’s important to flesh out who that is. One way to look at how you’re solving a problem is to think of things that annoy you, irritate you or make your life difficult and think about ways you can solve that problem using a business.

My go-to tool to give it a try is the Lean Canvas. Through filling out the Lean Canvas,  you can test your assumptions one by one to get a sustainable business model which will allow you to solve a problem and deliver value for a customer.

This video explains the concept in a really simple way.  This canvas then acts as a living document that you update as you learn.

By creating your Lean Canvas, you can validate your assumptions without spending too much time or money on your business. The best way to do that is through running experiments and using an iterative approach to developing your product/service through a Build-Measure-Learn feedback loop

That way you will create a product/service that people need, will use and are willing to pay for.  

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3.Get sh*t done!

Once you have filled out your Lean Canvas, validated your assumptions, and think you have a model that makes you more money than it costs to run, congratulations! Sounds like you’re ready to start a business.

And that means you’ve got to get shit done! Anyone can come up with great business ideas, the currency is all in the execution. This is the hardest part in running a business. Here are some tips that I have personally used and found effective. They might work for you too:

  • Goal setting. Start by setting SMART goals for your business.
  • Commit. Put your head down and work really hard.
  • Focus. Make sure you can spend time on the right activities that add the most value to your business. Everything else is noise!
  • Discipline. Say NO! To friends, family, to parties, to a coffee catch-up that isn’t adding value to your business at the early stage. Even if it seems work-related, if it’s not helping you progress it’s probably not important.
  • Value your time. If you have to work on something that isn’t your strong suit, see how important it is to your core business. If it is a critical function, perhaps get a co-founder or partner on board who can do it. Otherwise outsource the work.
  • Seek Help. Accept that you don’t know everything, get mentors and ask for help, often.

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4.Growth mindset is key

The most important thing about building a successful business is to have the right mindset. You should be willing to fail and get rejected plenty of times, but instead of looking at it as failure it should be viewed as a learning opportunity. Learn how to learn! Check out this awesome video by Tim Ferriss on smashing fear and learning anything.

The best thing you can do to your business is invest in your own personal and professional development (i.e learning). I do that through listening to podcasts, reading articles (mostly on medium), reading books, and asking for advice from friends, mentors and anyone who is willing to give it.

Now that you’ve read through the article, pick out a piece of pen and paper and write down your next steps to getting your business off the ground.

Go you good thing and make the magic happen! I know you can do it. You just have to start!