First-time entrepreneurs often make this costly mistake

One of the biggest mistakes first-time entrepreneurs make is building a product that doesn’t have a market. Founders get so excited about an idea, they start development immediately. But why make something to sell if you have no one to sell it to? If founders collect key market data at the beginning of a startup, they can save themselves time, money and equity, and have customers secured by launch time.

Future customers might not see things the same way you do.

It’s easy to believe that everyone thinks about problems and solutions the same way you do. Not so. When you take the time to understand how other people perceive a problem, you will validate some of your own assumptions and disprove others. There is only one way to do this—by running surveys, interviews and focus groups. When done well, these will reveal new problems, different solutions, patterns and opportunities. They will tell you what your target customer actually looks like. Most important, you will have useful data to help you better understand how much time and money prospective customers are willing to spend.

Identify key stakeholders.

To get started, think about who your key stakeholders are. Let’s use locally owned Synapse Sitters as an example. This platform connects parents of children with special needs to trained caregivers. When the firm’s CEO and founder, Marie Maher, started thinking about who her end-users and influencers would be, she filled spreadsheets with the names and contact information of parents, parent groups, psychologists, babysitters, respite-care providers and organizations that provide resources to parents and children with special needs. These people were her potential market—those she would need to understand in order to gauge whether her product was viable.

After putting together a list of key stakeholders, you will want to talk with leaders, experts and industry insiders. By involving them early in the development process, you build relationships with them. And they often become your first customers. This is exactly what happened with Synapse Sitters. Who are your key stakeholders?

Plan to spend a few weeknights and weekends developing these lists. Ask your friends and colleagues if they know anyone in the relevant industry and see if they would be willing to make an introduction for you. Explaining that you are collecting feedback will encourage people to help you because there is no cost and everyone has an opinion.

Survey prospective customers.

A survey will allow you to collect feedback about how prospective customers experience the problem, how they are currently dealing with it, and how they would like to resolve the problem in the future. You don’t need to convince them of anything at this point. You are asking questions to better understand the problem, their behavior and possible solutions.

Ask questions about how they experience the problem you are trying to solve, how they have interacted with the competition, what the idyllic solution would be for them, and how much time and money they are currently spending on the solution.

There are several free survey tools you can use, including Google Forms, SurveyMonkey and Typeform. Keep in mind that, as soon as you start asking for feedback, your advertising campaign begins. You never know who might open a door for you. The more people you share your survey with, the more people will want to know about your project. Those being surveyed tend to be extraordinarily candid, especially if their names and emails are not associated with the answers. To get your feet wet, plan to send the survey link to at least 150 stakeholders.

Interview prospective customers.

Email key prospects and let them know that their feedback is valuable and that you would like to interview them. Ask if they would be willing to meet with you for 30-45 minutes. When you interview people in small groups, they often build on one another’s ideas. You will hear personal stories and learn things that just don’t come out in a survey.

Before the interview, create a set of 10-15 questions that allow people to elaborate on what they shared in the survey. During the interview, remember that this is a time and space to collect data—not to share your personal feelings. You don’t want to bias the information you are trying to collect.

Follow the data.

Investors mitigate risk by relying on data about market behavior, traction and sales. If you plan to raise a round of funding, collect the data needed to build a product the market wants, needs and is willing to pay for.

This article was originally published in the Indianapolis Business Journal on December 12, 2018.