What is the demand for my product or service? Will people buy it? If not, why not? Can I change anything about my idea so that customers will want it more?
Is there enough money in the market for this product or service? If not, why not? Can I find a way around this problem or use another market that isn’t as crowded?
How much does it cost to produce my product or provide my service? How much will it cost me to market and distribute it?
What about supplies needed to keep my business running smoothly (computers, office supplies)? Do these costs fit within the price range of what people would be willing to pay for my product or service?
Who are my competitors in this industry sector and how much money do they make per year selling products similar to mine? How can I better compete with them by offering something different but still relevant in today’s market?
Best Ways to Evaluate Your Startup Idea
If you’ve already answered these basic (but crucial) questions, it’s time for you to take the next step. So that can avoid the early startup mistake of not evaluating your ideas the right way.
With that, here are the best ways to evaluate your startup idea and find out if it’s worth taking it to the market.
1. The 7+1 Model
This model created by Bhavdeep Singh and his team at Founders Institute is based on the simple theory that if at least 7 out of 8 factors in this list are positive, then it will be easy to get funding for your startup, and if not then it will be very difficult. These are…
What is the problem – or “customer pain point” – your business is addressing?
Why is your idea the best solution?
Why is it the most profitable solution?
Who’s in your team and why are they best placed to implement your business plan?
Why is now the best time to invest in the project, and why hasn’t it been executed previously?
Can your business be scaled into new geographies and markets?
Can you offer investors a strong chance of an ROI that’s worth their time and money?
Ultimately these are some of the key questions an investor will judge you on.
2. Use SWOT and PESTLE
The SWOT and PESTLE analysis are two great tools for validating and defining your business idea.
The SWOT analysis helps you identify the strengths, weaknesses, opportunities, and threats related to your product or service. It will help you decide how best to position your company in the market to improve its chances of success.
The PESTLE analysis helps you identify the political, economic, social, technological, legal, and environmental impact on your business.
3. The Business Model Canvas
The Business Model Canvas gives founders the ability to objectively assess the strengths and weaknesses of their business idea.
There are several different versions of the canvas, but they all have nine building blocks in common: customer segments, value propositions, channels, customer relationships, revenue streams, key resources, key activities, key partnerships, and cost structure.
Moreover, rather than relying on a lengthy checklist, the Canvas allows you to visualize your entire business model on a single page. There are many templates you can download and fill – and it should look something like this when you are done filling it.
4. Eliminate Bias From Your Feedback and Be a Skeptic
As much as you want people to like your idea, what matters most is whether they’d buy it. If people are smiling and nodding without saying anything substantive…
Or if they’re giving you feedback only because they don’t want to hurt your feelings — then either they don’t get it, or they don’t care about it. Either way, their opinions aren’t worth much.
That’s why you need to be critical.
Therefore, when asking for feedback, be specific in what you’re looking for by asking specific questions like: “What would keep you from using this product?” “What problems do you think this product solves?”
“What is the one thing that would make this service more useful?” The more targeted your questions — the less ambiguity.