The first step in developing a profitable business idea is to spend some time validating the concept. Long before you spend the first dime building a prototype you should be spending time actually talking to your target market. But when I talk to aspiring entrepreneurs about validating their business ideas, one of their biggest concerns they have is talking about their idea: “Someone will steal my idea!”
Let’s start by talking about why that is the wrong thing to worry about.
Don’t Worry About Someone Stealing Your Idea, Worry About Your Barrier To Entry
The are a number of reasons you shouldn’t worry about having your idea stolen, the number one being: People are Lazy. No one has the passion, energy, time, or inclination to go chasing after your idea than you do. In the movie The Founder, about Ray Kroc and McDonalds, the McDonald Brothers ask Kroc why he didn’t just steal their idea once he knew their proprietary fast food process. Kroc said, I needed the name McDonalds. It wouldn’t work if it was named Kroc’s. Anything you put your passion into will have a bit of your special sauce that can’t be replicated.
And secondly, people don’t steal untested ideas. It is expensive to bring a product to market, especially when the product is a “first to market.” If someone wants to steal your idea, much better to wait until you’ve spent the time, money, and effort to build the market and validate the concept. Then, you swoop in, make it better, cheaper, and spend more marketing dollars on it. That is why the more important question to ask yourself is: What is My Barrier To Entry?
What IS the special sauce that keeps others out? It could be patented intellectual property. It could be data that you have that can’t be replicated. It could be exclusive relationships and contacts. But without a Barrier to Entry, your idea is never safe, so get used to having competitors.
The due diligence phase starts by literally talking to anyone and everyone about your idea. Of course, you want to talk to as many people in your target as possible, but even those outside your target can give you good ideas.
Every time you pitch your idea, I guarantee you, they will give you 3 improvements on your idea. Those improvements get incorporated into your next pitch, thus the idea gets refined.
But you are also looking for the objections. The trick is to never defend your idea, your really want uninfluenced feedback. If you start hearing the same objection 3 times, you have a problem. You need to either figure out a solution to that objection, or figure out a response that answers the objection.
But it doesn’t stop there. By the time you are through with this process, you should know if anyone will buy your product, what the sales cycle is like, who has to sign off, and what all the objections are with responses to over come buyer doubt. You also should know the price point you can sell your product at.
They other thing you come away with is a list of potential beta testers and early adopters. Keep the people you interview informed of your progress. Get them engaged. And when the time comes, let them play around with the beta for additional feedback.
And hopefully by the time you launch you have customers and testimonials and are ready for success. But you also might find that the idea isn’t worth pursuing after the due diligence phase is over. Next time, I’ll give a few real life examples of idea validation for both companies I launched, and companies I didn’t after validating the concept.