We've all heard the expression, “it’s not a business, it’s a hobby”. It’s used to describe ideas that are ingenious but which don’t make any money. That may be because the product is over-engineered and too expensive, or because the idea is ahead of its time, or it doesn’t fit with the customer’s expectation, or the price/value equation is off kilter. As a result, the product is indisputably “neat,” but it can’t be turned into a business opportunity.
The sooner we ask the question "would you pay for this", the sooner we face reality about whether we have something of real business value. I've been spending a fair bit of time this week with some "on the napkin" ideas -- ideas that are new and novel and don't fit perfectly into categories that are already defined.
I've been pushing these folks to get out with some potential customers and start having this discussion. Too often we wait too long -- but that's the fatal flaw. There's a moment of truth that has to happen -- sooner rather than later someone has to ask the million dollar question (or hopefully the $100M question!!) -- Would you pay for this?
The trick is to ask open-ended questions that get will the customer talking in detail – no “yes or no” questions here. Here's an example of what i mean: a question like:
- How do you see this product fitting in to your organization? Who would use it, how often, and why?
or here's another one...
- Into what budget area would this type of idea fall inside your organization? (E.g. capital equipment, operational expenses, services). Who are the primary decision makers for that budget domain? (E.g. line manager, finance department, etc.).
You've got to get to this discussion as early in the development cycle as possible -- waiting until the idea is fully baked and you think you've got it figured can be fatal as i said earlier. Plus, investors are going to be asking you for customer validation so best to get out there and get is as soon as you can.
If you'd like me to write more on these techniques, let me know. I'll give you some more tools and tips.
Enjoy your day,
Wendy
author/advisor/lady with the flipcharts
So What? who cares? why you?
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