General Info - How To Evaluate Your Startup Idea‏

GBN Newsletter: How to Easily Evaluate your Startup Idea‏
From: newsletter@gobignetwork.com

The Problem / Solution Issue

... we sometimes get enamored with our solution at the expense of having a real problem to solve. ...

The value of a good product idea is proportionate to the size of the problem it solves. For example, if I tell you I have the cure to cancer I don’t even have to tell you what the product is. You inherently know what a massive problem cancer is, so certainly any solution I have must be somewhat interesting.

When you can communicate the severity of the problem to investors, and they nod their head and say “yeah, that’s a huge problem, I get it” then you’ve got an interesting business idea.

When you can communicate that same problem and back up it up with a solution that consumers respond to with “here’s my check” then you’ve actually got a business!

The Sales and Marketing Strategy

Although you may have the solution/problem thing licked, it means nothing without knowing how to bring a customer in the door. ... I guarantee when you don’t bring people through the door, the products don’t sell themselves!

That’s why a powerful sales and marketing plan can be even more critical to your business than an initial revenue model. ...

You don’t have to have a ten year plan for every type of media you will buy and sales pitch you will perform. You just need to have a basic explanation for how you can cost effectively find customers over the next year or two. Your plan might stink, but not having one is a huge red flag.

Revenue Model

... Your revenue model should be simple – someone is willing to pay for what you offer. Whether they pay for it indirectly through advertising or directly through a purchase, there has to be a sustainable and readily identifiable revenue model.

More importantly, it has to be a profit model. ... The only companies allowed to exist without a profit model are charities and major airlines.

The Product

The last order of business, which may sound bizarre, is the Product Plan itself. That’s because if the product doesn’t solve a customer’s problem that you can make money on, it just doesn’t matter what the product is.

In many cases you can test the market for your product against the three previous points by simply doing some basic research. Long before you actually build a product, you can ask customers if they’d buy it. You can start to figure out how difficult and costly it might be to acquire more of them. You can also get a sense for what you could sell your product for and get a basic understanding of whether you could do it profitably.

When you’ve got answers to all of these questions, then, and only then, it’s time to go build a company. ...