It may happen to you out of nowhere. Perhaps your mind is wandering. Maybe you’re facing one of life’s daily problems. Then the light bulb goes on! We all know what that means. The light bulb is a symbol of a fantastic idea! Or is it?
Is your idea the basis for a new company? Do you know what to do to figure that out? Do you have the commitment to make the idea a reality? Let’s look at steps you can take to figure out if your idea has what it takes to make it where it really counts, in the marketplace.
It’s human nature for us to believe in our own “great” ideas. It’s also true we generally talk about these ideas with family and friends, people who care about us and want to be supportive. So, we’re getting positive feedback from the very beginning, providing confidence and inspiring moving the idea forward even if the feedback most likely isn’t completely candid.
Many people think its common knowledge that the next steps involve writing a business plan, with more pages being better than less, and then getting investors to supply funding to put the plan into operation. This isn’t the case, and it is extremely unlikely one can obtain funding with such an approach. Nor is the next step to hire an attorney to register a company.
Instead, the next step I recommend is one you can take even before the AHA moment, get some startup business education. I’m not talking about spending lots of money or many years seeking an undergraduate or graduate business degree. I am talking about taking advantage of the great startup material that can be had for free online or just a few dollars in books.
Today’s approach to startups is to test your idea with those you identify are your future customers. A platform for this approach that we teach at Alpha Loft is called the Business Model Canvas, developed by Alexander Osterwalder. As its name implies, it is a single page/canvas on which founders paint a picture of their startup companies, and as with painting the picture develops a little bit at a time. In using the canvas one is going through a process of discovering a business model that works for the idea that was conceived. When going through a process with multiple facets, as is true of every business, if one aspect of the model changes, then other things will have to be modified as well. These are iterative cycles of discovery and adjustment of the business model.
The business model canvas itself is divided into nine sections to consider and develop in detail. These include: revenue streams, key partners, cost structure, channels and more. The two important sections in developing the AHA idea are customer segments and value propositions. The AHA idea only has the prospect of becoming a successful product or company if it offers identifiable value to specific customers. After all, you don’t have a business if someone isn’t willing to pay you for something.
Once you’ve clearly identified your customer segment and the value proposition of your AHA idea to that segment, its time to get out of the building.
The only way to begin to understand whether you’re right about your thinking is to test it on the very people you believe are your customers. This is done through individual contact and interviews, and it needs to be done with people who don’t know you.
It is human nature that people who know you will soften any negative feedback and be more positive than others. You need brutally honest feedback in this process, which you get from strangers without a vested interest in a friendship with you.
Thus begins the business model discovery process. Of course, this column is highly simplified and is only meant to arouse your curiosity. The startup process is not quick or easy, and requires a lot of work. As I mentioned earlier, startup education will go a long way to getting on a solid track. This is what we do at Alpha Loft. Startup Fundamentals is a program we run at Alpha Loft, which will be offered this fall. We use an online Udacity video course on the Business Model Canvas done by Stanford professor Steve Blank to guide us from week to week.
You can use the same course on your own to develop your AHA idea, or consider applying to do so with us during Startup Fundamentals this fall. I look forward to hearing from you at unionleader.com/expert or please contact me at Mark@Alphaloft.com. Learn more at alphaloft.com.
Mark Kaplan, CEO of Alpha Loft, has 30 years of executive, financial, venture capital and investment industry experience.