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Got an idea and want to start a business

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Era Abraham Iyayi
Era Abraham Iyayi

The document provides advice on answering 3 key questions to successfully start a business: 1. Is there a gap in the market - conduct customer interviews to validate an identified problem and ensure there is demand. 2. Is there a market in the gap - determine the market size and growth potential, and that the opportunity is large and profitable enough. 3. How to consistently deliver value - develop a business model canvas to outline how value is created and delivered to customers, and test hypotheses with customers to validate the model. Continually adapting based on feedback is important.

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Got an idea and want to start a business? 3 Questions to Answer
Inspiration has struck you with a genius idea for a business, but how exactly do you build your idea into a sustainable business?
It will take more than INSPIRATION. It will take PERSPIRATION Genius is one percent inspiration and 99 percent perspiration. Thomas Edison
You will perspire to find the right answers to 3 important questions.
Question 1 Is there a gap in the market?
Specifically, What is the ideal customer experience? Is there a gap between customers actual and ideal experience? (Gap Analysis) Exactly what problem will this idea solve or what gain will it offer? (Value Proposition) For whom do we solve the problem and offer the gain? (Target Market) Is our target market already looking for a solution to the identified problem and gain? Are they willing to pay for a solution? (Customer Profiling) Why is this idea best suited to solve the problem or offer the gain? (Our Differentiator)
The way to spot gaps in the market is not to try to think of startup ideas. It's to look for problems, preferably problems you have yourself. The very best startup ideas tend to have three things in common: they're something the founders themselves want, that they themselves can build, and that few others realize are worth doing. Microsoft, Apple, Yahoo, Google, and Facebook all began this way. - Paul Graham Founder, Y-Combinator
It is important to work only on problems that really exist
It sounds obvious to say you should only work on problems that exist. And yet by far the most common mistake startups make is to solve problems no one has.
There is only one way to find out if the problem you want to solve exists
Get out of the building and talk to people about the problem and your solution to the problem
A startup begins with a vision: a vision of a new product or service. A vision of how the product will reach its customers, and a vision of why lots of people will buy that product. But most of what a startup founder initially believe about their market and potential customer are just educated guesses. To turn the vision into reality (and a profitable company), a startup must test these guesses, or hypotheses and find out which are correct. So the general goal is to turn the founders hypotheses about the market and customers into facts. And since the facts live outside the building, the primary activity is to get in front of customers. Only after the founders have performed this step will they know whether they have a valid visionor just a hallucination. Steve G. Blank (The four steps to the Epiphany)
Remember, you dont necessarily need to come up with a brand new idea or invention. You simply need to take an existing idea and do it better. You may be faster, cheaper or have a better focus on customer service - either way you need to find a differentiator. You only need to ensure that there are people who consider your product to be a solution to a problem they are willing to pay to get solved.
The right answer at this phase will be 1. A better understanding of your target customers and the problem you are trying to solve for them. (From the customers perspective) 2. A fine-tuned and validated vision for your product and solution 3. Facts and confidence to attract and convince partners and investors
Question 2: Is there a market in the gap?
Is it profitable or going to be profitable to commit resources (time, effort and money) to solve the identified customer problem and seize the opportunity gap in the market?
How big is the opportunity you are trying to seize and how big is it expected to become? (Market Size) Why now? (Market Window) What alternatives are out there? (Competitive Landscape) Is your business scalable? (Does the business have the potential to multiply revenue with minimal incremental cost)
How Big is the Pie? Total Available Market Total Available Market How many peoplepeople would want/need the product? How large is the market in ($) if they all bought? How many units would that be? How Do I Find Out? Industry Analysts Published Market Reports
How Big is My Slice? Segment Available Market How many people need/can use product? How many people have the money to buy the product? How large would the market be ($) if they all bought? How many units would that be? How Do I Find Out? Talk to potential customers Segment Available Market Total Available Market
How Much Can I Eat? Target Market Who am I going to sell to in year 1, 2 & 3? How many customers is that? How large will the market be ($) if they are all bought? How many units would that be? How Do I Find Out? Talk to potential customers Identify and talk to channel partners Identify and talk to competitors Total Available Market Target Market Segment Available Market
You should have answers to the following market size questions How big can this market be? How much of it can we get? Market growth rate Market structure (Mature or in flux?) Most important: Talk to Customers and Sales Channel Next important: Market size by competitive approximation Market Analyst reports are great
Question 3 How best do I consistently deliver value to my target market?
A business model describes the rationale of how an organization creates, delivers and captures value to its targeted market segment. - Alexander Osterwalder and Yves Pigneur
A business model canvas developed by Alexander Osterwalder and Yves Pigneur has become popular for developing, describing and thinking through the business model of businesses. The business model canvas contains nine (9) building blocks that interact to form the business model of an organization.
Got an idea and want to start a business
CUSTOMER SEGMENTS which customers and users are you serving? which jobs do they really want to get done? images by JAM
VALUE PROPOSITIONS what are you offering them? what is that getting done for them? do they care? images by JAM
CHANNELS how does each customer segment want to be reached? through which interaction points? images by JAM
CUSTOMER RELATIONSHIPS what relationships are you establishing with each segment? personal? automated? acquisitive? retentive? images by JAM
REVENUE STREAMS what are customers really willing to pay for? how? are you generating transactional or recurring revenues? images by JAM
KEY RESOURCES which resources underpin your b.model? which assets are essential? images by JAM
KEY ACTIVITIES which activities do you need to perform well in your business model? what is crucial? images by JAM
KEY PARTNERS which partners and suppliers leverage your model? who do you need to rely on? images by JAM
COST STRUCTURE what is the resulting cost structure? which key elements drive your costs? images by JAM
key value customer activities proposition relationships key customer partners segments cost revenue structure key streams resources channels images by JAM
Hmm, interesting so what do I make of that?
use it as a tool to...
sketch out your own business model
Got an idea and want to start a business
Got an idea and want to start a business
Got an idea and want to start a business
Take the time to come up with alternative business models
the same technology, product, or service can have numerous business models
Got an idea and want to start a business
try sketching out alternative business models by asking yourself...
transactional vs. recurring revenues niche market vs. mass market capital expenditure vs. partnership product vs. service direct sales vs. indirect sales open vs. closed scale vs. scope blue ocean vs. red ocean personal vs. automated difficult questions one customer segment vs. another paid vs. free distributed vs. centralized physical vs. virtual copyright vs. copyleft in-sourcing vs. out- sourcing production fixed vs. variable costs advertising vs. sales
only make a first choice after prototyping and thinking through several models...
Got an idea and want to start a business
OK. Youve got your preferred model, but youre not done yet...
Your business model idea is still a set of hypotheses.
a business model might look great on paper... ng k building ... but be honest that its
... just a set of hypotheses
...so you need to get out of the building and...
test each hypothesis with customers
product market type competition test your hypotheses and adapt your business model
problem customer user payer test your hypotheses and adapt your business model
channel test your hypotheses and adapt your business model
demand creation channel (customer) (problem) product market type competition validate business model channel pricing model problem customer user payer test your hypotheses and adapt your business model
Until you have a proven business model and a minimum viable product customers are willing to pay for
In conclusion
When next you have that great idea and want to start a business..
Be sure that there are people who care about the problem your idea seeks to solve 1
Confirm that the size of the opportunity makes it profitable to commit resources 2
Ensure that you have a proven business model that sustainably captures and delivers value to the target customer segment 3
Once you have a proven business model and a product, it is time to scale your marketing. 4
Thank You Iyayi, Era Abraham @eraiyayi
Credit http://www.slideshare.net/sblank/presentation-examples-for-class-2-mkt-size-and-hypotheses-testing Internet Search

More Related Content

Got an idea and want to start a business

  • 1. Got an idea and want to start a business? 3 Questions to Answer
  • 2. Inspiration has struck you with a genius idea for a business, but how exactly do you build your idea into a sustainable business?
  • 3. It will take more than INSPIRATION. It will take PERSPIRATION Genius is one percent inspiration and 99 percent perspiration. Thomas Edison
  • 4. You will perspire to find the right answers to 3 important questions.
  • 5. Question 1 Is there a gap in the market?
  • 6. Specifically, What is the ideal customer experience? Is there a gap between customers actual and ideal experience? (Gap Analysis) Exactly what problem will this idea solve or what gain will it offer? (Value Proposition) For whom do we solve the problem and offer the gain? (Target Market) Is our target market already looking for a solution to the identified problem and gain? Are they willing to pay for a solution? (Customer Profiling) Why is this idea best suited to solve the problem or offer the gain? (Our Differentiator)
  • 7. The way to spot gaps in the market is not to try to think of startup ideas. It's to look for problems, preferably problems you have yourself. The very best startup ideas tend to have three things in common: they're something the founders themselves want, that they themselves can build, and that few others realize are worth doing. Microsoft, Apple, Yahoo, Google, and Facebook all began this way. - Paul Graham Founder, Y-Combinator
  • 8. It is important to work only on problems that really exist
  • 9. It sounds obvious to say you should only work on problems that exist. And yet by far the most common mistake startups make is to solve problems no one has.
  • 10. There is only one way to find out if the problem you want to solve exists
  • 11. Get out of the building and talk to people about the problem and your solution to the problem
  • 12. A startup begins with a vision: a vision of a new product or service. A vision of how the product will reach its customers, and a vision of why lots of people will buy that product. But most of what a startup founder initially believe about their market and potential customer are just educated guesses. To turn the vision into reality (and a profitable company), a startup must test these guesses, or hypotheses and find out which are correct. So the general goal is to turn the founders hypotheses about the market and customers into facts. And since the facts live outside the building, the primary activity is to get in front of customers. Only after the founders have performed this step will they know whether they have a valid visionor just a hallucination. Steve G. Blank (The four steps to the Epiphany)
  • 13. Remember, you dont necessarily need to come up with a brand new idea or invention. You simply need to take an existing idea and do it better. You may be faster, cheaper or have a better focus on customer service - either way you need to find a differentiator. You only need to ensure that there are people who consider your product to be a solution to a problem they are willing to pay to get solved.
  • 14. The right answer at this phase will be 1. A better understanding of your target customers and the problem you are trying to solve for them. (From the customers perspective) 2. A fine-tuned and validated vision for your product and solution 3. Facts and confidence to attract and convince partners and investors
  • 15. Question 2: Is there a market in the gap?
  • 16. Is it profitable or going to be profitable to commit resources (time, effort and money) to solve the identified customer problem and seize the opportunity gap in the market?
  • 17. How big is the opportunity you are trying to seize and how big is it expected to become? (Market Size) Why now? (Market Window) What alternatives are out there? (Competitive Landscape) Is your business scalable? (Does the business have the potential to multiply revenue with minimal incremental cost)
  • 18. How Big is the Pie? Total Available Market Total Available Market How many peoplepeople would want/need the product? How large is the market in ($) if they all bought? How many units would that be? How Do I Find Out? Industry Analysts Published Market Reports
  • 19. How Big is My Slice? Segment Available Market How many people need/can use product? How many people have the money to buy the product? How large would the market be ($) if they all bought? How many units would that be? How Do I Find Out? Talk to potential customers Segment Available Market Total Available Market
  • 20. How Much Can I Eat? Target Market Who am I going to sell to in year 1, 2 & 3? How many customers is that? How large will the market be ($) if they are all bought? How many units would that be? How Do I Find Out? Talk to potential customers Identify and talk to channel partners Identify and talk to competitors Total Available Market Target Market Segment Available Market
  • 21. You should have answers to the following market size questions How big can this market be? How much of it can we get? Market growth rate Market structure (Mature or in flux?) Most important: Talk to Customers and Sales Channel Next important: Market size by competitive approximation Market Analyst reports are great
  • 22. Question 3 How best do I consistently deliver value to my target market?
  • 23. A business model describes the rationale of how an organization creates, delivers and captures value to its targeted market segment. - Alexander Osterwalder and Yves Pigneur
  • 24. A business model canvas developed by Alexander Osterwalder and Yves Pigneur has become popular for developing, describing and thinking through the business model of businesses. The business model canvas contains nine (9) building blocks that interact to form the business model of an organization.
  • 26. CUSTOMER SEGMENTS which customers and users are you serving? which jobs do they really want to get done? images by JAM
  • 27. VALUE PROPOSITIONS what are you offering them? what is that getting done for them? do they care? images by JAM
  • 28. CHANNELS how does each customer segment want to be reached? through which interaction points? images by JAM
  • 29. CUSTOMER RELATIONSHIPS what relationships are you establishing with each segment? personal? automated? acquisitive? retentive? images by JAM
  • 30. REVENUE STREAMS what are customers really willing to pay for? how? are you generating transactional or recurring revenues? images by JAM
  • 31. KEY RESOURCES which resources underpin your b.model? which assets are essential? images by JAM
  • 32. KEY ACTIVITIES which activities do you need to perform well in your business model? what is crucial? images by JAM
  • 33. KEY PARTNERS which partners and suppliers leverage your model? who do you need to rely on? images by JAM
  • 34. COST STRUCTURE what is the resulting cost structure? which key elements drive your costs? images by JAM
  • 35. key value customer activities proposition relationships key customer partners segments cost revenue structure key streams resources channels images by JAM
  • 36. Hmm, interesting so what do I make of that?
  • 37. use it as a tool to...
  • 38. sketch out your own business model
  • 42. Take the time to come up with alternative business models
  • 43. the same technology, product, or service can have numerous business models
  • 45. try sketching out alternative business models by asking yourself...
  • 46. transactional vs. recurring revenues niche market vs. mass market capital expenditure vs. partnership product vs. service direct sales vs. indirect sales open vs. closed scale vs. scope blue ocean vs. red ocean personal vs. automated difficult questions one customer segment vs. another paid vs. free distributed vs. centralized physical vs. virtual copyright vs. copyleft in-sourcing vs. out- sourcing production fixed vs. variable costs advertising vs. sales
  • 47. only make a first choice after prototyping and thinking through several models...
  • 49. OK. Youve got your preferred model, but youre not done yet...
  • 50. Your business model idea is still a set of hypotheses.
  • 51. a business model might look great on paper... ng k building ... but be honest that its
  • 52. ... just a set of hypotheses
  • 53. ...so you need to get out of the building and...
  • 56. problem customer user payer test your hypotheses and adapt your business model
  • 57. channel test your hypotheses and adapt your business model
  • 59. Until you have a proven business model and a minimum viable product customers are willing to pay for
  • 61. When next you have that great idea and want to start a business..
  • 62. Be sure that there are people who care about the problem your idea seeks to solve 1
  • 63. Confirm that the size of the opportunity makes it profitable to commit resources 2
  • 64. Ensure that you have a proven business model that sustainably captures and delivers value to the target customer segment 3
  • 65. Once you have a proven business model and a product, it is time to scale your marketing. 4
  • 66. Thank You Iyayi, Era Abraham @eraiyayi
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