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 new startup, they can save themselves time, money, equity, and have customers secured by launchtime.
Future customers may 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 importantly, 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 CEO & 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 provided 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 on spending 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 that you are trying to solve, how they have interacted with the competition, what would be the idyllic solution for them, as well as how much time and money they are currently spending on the solution.
There are several free survey tools that 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 that 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 on sending the survey link out 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, often they build on each other’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 and not share your personal feelings. You don’t want to bias the information that 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 that the market wants, needs, and is willing to pay for.
This article was originally published by the Indianapolis Business Journal on 12/12/18.
