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Be Willing To Kill Your Idea
July 3, 2008 |
If you’re like me, you love to come up with ideas. Inspiration strikes at any time and you immediately start to mentally construct the b-plan. What are my startup costs? What capital do I need to start this? What inventory will I need? What will be my distribution method? What will the company’s name be? What is the target demographic? How much do I need to sell in order to break even? Who do I know that would fit great on this team? If you’re not asking yourself these questions, you need to take your idea to the next level and start asking them! Not only do you have to ask all of these questions, write up your answers, run the numbers, and ask yourself whether or not you would be passionate enough about this idea, but also you have to ask yourself if this is feasible and worth your time
What Assumptions Are You Making?
After running through the planning stage and figuring out what situations would make the numbers work, I often find myself becoming too excited about the idea and wanting to immediately start the implementation. But, before you focus your attention like a laser, ask yourself whether or not your assumptions make sense. Do you really think you can sell that many cups of coffee in a day? Do you really think 10% of the people who visit your site will sign up? Did you pay yourself for the amount of time you will commit to this endeavor, the number of sleepless nights, the countless headaches? Be ruthless in your evaluation and if any of your assumptions are shaky, be willing to kill the idea. It’s better to let an idea die and move on to your next big plan than to sink hundreds of hours of your time into an idea’s implementation that ultimately fails.
What Questions Should I Ask?
- Why hasn’t it happened? This is one of the best questions to ask because good ideas are a dime a dozen. Rather, it’s the implementation, execution, and timing that have more to do with success. Everyone thought video on the internet was going to be a big thing, but it wasn’t until YouTube came around that the conditions were just right - enough people had broadband internet, people had access to video equipment, and they made it super simple to upload your video and share it.
- Is this something people will actually buy? A common sense question, but needs to be asked nonetheless. If you are targeting students and you are a student, would you buy your own service? If you aren’t part of the target demographic, ask someone who is.
- Is there IP around it? What will prevent competitors like a Microsoft or Google from entering the field and doing what you do at a lower price? Is there something you can patent, a trade secret to be developed, or a business process to leverage? In the case of internet startups, this is much harder to do and is somewhat impractical, but in a medical devices company, you don’t have a company unless a patent is present.
- How will you get distribution? In the Information Age, it is much easier to get exposure, yet also much harder. To get a website up and start marketing is simpler than ever before, yet because it’s so easy, what’s separating you from the other hundred websites competing for the same eyeballs? Distribution is key and by leveraging different marketing, publicity, and partnership streams, along with killer value, it may be just enough to gain traction in this sea of information.
Conclusion
As you can see, merely coming up with an idea and fleshing out some of the logistics isn’t enough. Sure, it all looks great on paper, but given the real-world business environment it becomes absolutely necessary to check if your assumptions are airtight. Any small hole could lead to a devastating failure. A quick story about the importance of assumptions is with my business mentor. He was in the process of starting a medical devices company. He had done all of the market research, had assembled a killer team, had worked out the numbers, and everything looked like a go. The only problem was that the patent holder had previously licensed the technology to a company that was now failing and instead of re-licensing the patent, he instead wanted to juice whatever he could from the failing company and essentially let the patent expire. As you can see in this case, setting up an agreement with the patent holder is a somewhat small but extremely critical part of starting this business, and after hundreds of hours were invested the business plan collapsed and is no longer viable. Final lesson: Check your assumptions, and if anything critical isn’t set in stone, be willing to drop the idea without looking back.