The answer is "it depends". It depends on the following:
1) Your current 'runway': [How much money you have saved + Your current recurring income - Your current expenses].
2) How much money it would take to develop a 'minimal viable product' (MVP) that would allow you to test your idea. (i.e. would it require 0.1% of your savings + income, or would it by 50%)
3) How much potential you think your idea has.
Usually, the cost of #2 is something that can be made _much_ cheaper than you might initially imagine. This can be done by truly understanding what the core 'value proposition' is that you want to test, and understanding very affordable, minimalist techniques that will allow you to develop a product capable of testing it with potential customers. I've done this many times in the past, and it has allowed me to rapidly test out and iterate many ideas with very small capital investment needed.
Again, the answer depends on understanding the details of the previously listed issues #1, #2, and #3 above. If you'd like to discuss the specifics of your idea and whether an MVP could possibly be quickly and cheaply created and tested, either do some online research on potentially cheap and easy tools that might help out, or let me know, I'd be happy to help,
My personal Sunset Rule might be handy.
If I can't make a sale by sunset, I figure my idea is worthless + I get a new idea.
You can scale this also... so if I can't make several $1000s of sales for a few hours work, then I get a new idea also.
Tip: If you make sales for $0 investment, you can never go upside down + your idea will scale forever.
Well yes & no.
Yes, coz if you've identified a gap in the market you wish to serve and if you feel your potential idea may fill the gap, you should test it out. However testing would include the following:
1. Understanding the need for such an idea - you might have to do a market research to heat map your audience and demographics.
2. Product / Service benefits & Configuring a pricing system for your business service or product - it is inevitable to put together the right value proposition to your audience along with the appropriate price point.
3. Outline the go to market strategy to reach out to your target market.
There are plenty of cost effective methods to execute the pointers above.
No, if you're the only one excited with the idea and planning to invest time and money without proper focus or plan.
1 cost-effective tip for testing a potential idea is to start a mastermind group with a close group of family and friends where you can bounce your ideas and test responses initially.
If you have further questions, feel free to schedule a call.
I think if you have used the word 'potential' with your idea, I am assuming that you have done the basic market research for feasibility of the idea. I would say, you must spend a small amount of money to test that idea, otherwise how would you know if it actually has the potential or not.
If you are in the idea stage, yes you should absolutely test your business idea, but the testing should not cost you any money. If you are planning to start a business you want to make sure your customers want what you are trying to sell, or there is no point in building the product or service.
The reason it should not cost you anything is because at this stage you should be able to talk to 30-50 potential target customers to get a sense of how interested they are in your idea. If you see consistent interest by 70 - 80% of the people interviewed,then your idea has merit and you should think about building an MVP.
As has been described by other answers here, you need to know the following
1. Know who your target customer is
2. Know how to clearly communicate your idea
Happy to talk if you'd like to brainstorm about how to test your idea.
All the best!
If you don't feel comfortable about spending money for that matter than don't do it or at least do it in a limited manner and on a specific goal.
I don't do it personnally and I am currently developping BtoC sales for an innovative technology on the field of housing water treatment. For business it means that I have to spend sometimes on my own for that matter. And anyway this is the best way to understand where are the bottlenecks in my offer !
Hope this can help you.
There is not straight forward answer for this question.
Based on my experience with Idea Validations for new business, here are few points :
1. Identify Your Risk Taking Ability : It’s always vary from person to person, but as a thumb rule :
- If you have extra funds apart from your 6 month expenses in your savings bank account, give it a try.
- Don’t spend more than 5-7% of your total savings for idea validation.
2. Entrepreneurial Spirit : In my opinion a good Entrepreneur is, who can think and able get higher results with the limited resources by his effective approach.
You have a business idea, Wow !! Welcome !! Here is your first test for the entrepreneurship to validate your business idea with limited resources.
Hello I am Priyanka.
I would share my experience with the person who is this.
Step 1: Write Down the Problem, not a Specific Solution
You want to be able to clearly articulate a problem that you or others experience regularly. Notice that you’re only focused on the problem here, not any specific solution — that comes later.
You want to be able to write down your problem in a simple statement. A few examples:
It’s impossible to follow up with customers once they leave a restaurant.
It’s hard to determine which customers will churn before they actually do.
It’s too hard to design professional-quality graphics for social media.
You get the idea: keep it basic and refine the problem until you can articulate it with one sentence.
Step 2 : Determine if it is a Tier 1 Problem or Not
It’s easy to identify problems — they’re everywhere. What you’re really looking for is what I call a “tier 1 problem” — which means the problem you’re looking to solve is one of the top 3 problems your potential customers are experiencing.
Let’s say your (eventual) target buyer is the CEO of a small business. Their top 5 problems might look something like this:
Generate more sales
Get marketing running efficiently (hire a head of marketing)
Outsource our payroll and benefits
Increase our product selection
Get better at social media and invest in Facebook ads
If you’re planning to launch a social media tool, you can see that’s NOT a tier 1 (top 3) problem for the typical CEO of a small business — it’s #5 on their list.
They’ll be so focused on solving their first 3 problems that you’ll never get a look in — EVEN if you have the best product, and EVEN if you have the best support. They simply won’t have time (or budget) for you if you’re not solving a problem that’s top of mind for them — a tier 1 problem.
This is probably the hardest lesson to learn and the one most startup founders ignore . “But my product is so great," the thought goes. "Once they use it they’ll sign up for SURE!” If you're not on top of mind, you're miles away from a purchase.
So how do you validate that your problem is actually a tier 1 problem? First you need to know who might typically buy your product. You want to build a basic profile, like this:
Company size: 100–500 people
Role: CEO or VP of Marketing
Location: North America
Industry: Retail, Technology & Hospitality
You then want to come up with a list of 20–50 prospects who meet this criteria. The easiest way to get that list is to jump on LinkedIn and research. Then just connect with all of the prospects you find with a message like this:
We’re hoping to spend 15 minutes on the phone with CEOs who are experiencing [problem]. We’re doing research and have nothing to sell. Would you be available for a quick call tomorrow at 3pm?
A few pointers here:
Be short and to the point — don’t waste their time.
Include a specific day and time when you want to talk — avoids email ping pong.
Reach out to 3x the number of prospects you actually want to talk to. So if you want to talk to 20, message 60. Most won’t reply and some won’t be interested.
Great. Now you’ve got at least 20 people ready to chat who are experiencing the problem you’ve identified.
For further queries you can consult me.