First: Create a Minimum Viable Offer (MVO):

An MVO will confirm that there is an opportunity to be exploited. It differs from an MVP (Minimum Viable Product) in that it is more of a draft of your concept rather than a rough prototype of the product/service itself. You are articulating your concept using the minimum number of benefits needed to sell it. It must answer the question around what value your product/service delivers to what specific niche that would deliver what desired result.

Henry Latham of the Agile Insider uses the following outline to create an MVO:

We help [NICHE] achieve [DESIRED OUTCOME] with [OFFER].

For example: We help busy business leaders save time with a lightening fast email app.

A good MVO will be low cost and still be able to accurately measure your early adopters’ interest. In other words – how likely are the people-who-have-the-problem-you’ve-identified to purchase your solution.

The MVO is a tool to help your potential customers gain an understanding of your solution, without requiring a product to be built … yet.

It can be a statement, a simple website, an explainer video, a social media page, a diagram or mock-up, or a blog post.

An MVO is not the same as an MVP. A Minimum Viable Product (MVP) has just enough features to gather validated learning about the product. It is the most basic thing you can create, and sell, to test whether the customer really wants what you are building. The MVO describes those features, or value, without actually building the prototype yet. You test the idea with an MVO. You test the product with the MVP.  Critical to remember … your MVP must deliver the value you promised in the MVO.

The MVO describes the value. The MVP delivers it.

Second: Conduct Customer Validation Interviews:

You’ve developed an MVO so you can test your idea by asking potential customers what they think. That’s your goal. Now it is time to see if anyone will actually buy your idea. You’re going to ask potential customers who will tell you.

If you have been using Lean Startup principles to start your business, you would have already talked to some people in your potential target audience (people who have the problem you’ve identified) about:

1. the problem they are experiencing,
2. what they really want in a solution and
3. what they are currently using as a sub-optimal solution.

Hopefully you used their language and feedback to develop your MVO. They are the best people to go back to now to find out what they think. They’re the ones who are your early adopters, so now is the time to say…I listened to you and this is what I came up with. Did I get it right? And if not, why not?

• Set up at least 20 customer validation interviews (more is better) with people who have the problem you’ve identified (your early adopters). Bring your MVO with you.

The Customer Validation interviews will help you validate your offer. Remember, the MVO articulates the benefits of your idea and the outcomes your customers will experience. These interviews will help you find the answers to some of the next steps you’re going to take.

• It is important to be open ended in your questioning and not leading.

This is your chance to find out if your product has legs so get the good, the bad and the ugly! If it isn’t going to work, you want to know NOW, before you invest more time, energy and funds into building a version that no one wants to buy. If they say they don’t like it now, they aren’t going to like it later unless you fix it.

Talk to your customers about how they want the solution to look. Do they want a website or a mobile app? What features are most important to them?

• Remember to ask open-ended questions and only stop when you’ve had validation from at least 40% of your interviewees.

Validation means they agree about the existence of the problem and your proposed solution. If you can’t easily get to 40%, try pivoting. Most founders pivot several times before reaching idea validation. You want to land on the idea that people want, and will pay for. Before you pivot, make sure you are talking to TRUE early adopters, the people who need a solution to the problem you’ve identified.

End by asking them if they would sign-up/purchase your product/service. And test different pricing models.

• Keep pivoting and testing until at least 40% of the people who hear your offer say “YES” and confirm demand for your solution to their problem. When you get to this point – you have validated your idea!

Keep track of each interviewee’s answers individually so you can compare them later, looking for similarities. A sample Customer Validation Interview worksheet is below if you need it:

You need to hear the same message again and again before you know that you aren’t just talking to outliers. Research shows that if you don’t get 40% of your customer interviews giving you a thumbs up, you need to go back to the drawing board.  If you get 40%+, you can keep moving forward and develop your MVP.

Why might the number be less than 40%? There are several reasons, but it is possible that no one is interested in your MVO. It also may be that some are, but not enough. Maybe you didn’t correctly figure out the value proposition or maybe you aren’t talking to the right people – ones who are actively looking to fix that issue.

As mentioned above, if you’re less than 40%, pivot. Most companies pivot at some point –pivoting isn’t a failure; it is a sign that you’re doing the appropriate testing along the way and only moving forward when your hypotheses are validated. It means you are being a smart entrepreneur, and you’re maximizing your chance of having a successful startup.

Customer validation interviews are the most important part of how to start a business. So keep going until your results indicate you are ready to build your MVP. Then you’ll go back to your Early Adopters to get their feedback on it.

Good luck!

The post How to Test, or Validate, Your Business Idea appeared first on 100 Steps 2 Startup.

If you’re someone who wants to start a business, either full-time or a side hustle, the biggest challenge is often figuring out what that business should be? How does one come up with a great business idea? People start in a whole bunch of ways; have a look at some of them below.

1. Start with something that you can do on the side if you want lees risk. A young woman I know had a fine arts background but her job was in sales. She needed a creative outlet so she started painting needlepoint canvasses for herself and a few crafty friends and posted them on Instagram to see if she could sell to others. The response was so good that she set up an Etsy site. In less than a year, she was able to set up her own website and hire someone to help her with fulfilment and work at it full-time. She’s making more than she was making at her very good sales job, but she did it in increments, in a very low-risk way.
2. Start with something you, yourself, have tried unsuccessfully to My first business with my business partner of 26 years was a print and, eventually, online children’s resource directory. We had been looking for business ideas and decided to focus on the kids’ market as that was one we knew well (we both had several young children). We’d come up with an idea and then try to find out if it existed and after several unsuccessful attempts to source the info (pre-internet), we realized that if we couldn’t find that information, likely others couldn’t either. We parleyed our own need to find information into a business that provided info for all. It helped us, it helped our target audience, and it helped all the businesses in that vertical as they were able to directly reach parents looking for specific products/services.
3. Start with a product or service that you can build off of. Is there a product that you like, but maybe could give it a twist for a new market or even the same audience? For example, I love to cycle and my husband and kids are serious cyclists and triathletes. But I had a bad fall & injury a year or two ago, and now I’m a bit afraid to get back on the horse (or cycle). I played around with getting a 3-wheel bike to give me a bit more stability, but they all look like they were made for 80-year olds, they can’t really go fast and they’re heavy and clunky and upright. How cool would it be to make a racing-type road bike that just had 3 wheels in the back? I’d buy it in a second so I could go out with my family at their pace, but just have a bit more stability and ease getting on and off.
4. Start with the customer! They are your gold mine. Think of all the groups you are part of (parents, tennis players, chess players, dog-lovers, gardeners, etc) and start talking to the people in those groups about all the frustrations they have with things that their group uses. Find out which items have been rigged to fit specific needs in a sub-optimal way and then figure out if (how) you can do it better. Make sure it is a need to have, not a nice to have as you want the product to be one that people would spend money on. Even though you are a part of that group, you’ll discover frustrations & problems that you’ve never even thought of once you begin asking and listening. Then go-ahead and build a minimum viable product (MVP) quickly and inexpensively so you can test it with your group. You have a ready-made target audience and a perfect method to see if your product has legs before you have to spend a lot of money. Get your “group” to help you make it better and iterate ‘til you have something that you can sell more widely. When you start with the customer, you aren’t likely to build a product that has no audience and therefore, no sales.
5. Start with something that people need in specific locations. Have you ever been to an event or a venue or a school and people are always saying…”I need X – is there anywhere nearby to get it?” Whether it is food or drink, or phone chargers or hand sanitizer or something bigger, you can often step in to fill a need in a place that they need it.

While we talk about focussing on the customer in #4, it is important to focus on the customer in all of them. Anytime you have a new business idea, you need to make sure it is something that the customer wants, needs and values. You can create the most incredible, cheapest, most beautiful, most …. whatever product or service, but if the customer isn’t willing to pay and doesn’t want it, your business will have an audience of one – and that is you. Focus on the customer first, and you know that you are serving up something that has a real chance of success.

So, whether we are in lock-down or in recovery, there are lots of opportunities out there; problems to solve. Just take the time to brainstorm with yourself, or with a friend, and see which ones have legs. You’ll see how easy it is to come up with a great idea for a startup. Start small but just start!

“Every problem is a gift—without problems we would not grow.” – Anthony Robbins

Which problem will be YOUR gift?

The post How to come up with a great business idea appeared first on 100 Steps 2 Startup.