The Three Essentials For a Desirable Startup
From Opportunity to Feasibility
“Ideas are easy. Implementation is hard.” Guy Kawasaki
So, you have a business idea, a flash of inspiration, you see potential, you have a hunch things will go well but how did you determine all that? You want to grow a tree, so are you looking to plant one seed or multiple? Besides, do you expect your tree to just grow anywhere? Startup feasibility is synonym to literally testing your idea. How achievable is your dream? It’s like a screening test and helps you to get a thorough understanding of what is involved and how you are going to make it through. Here’s a checklist:
- Name at least two valid reasons to go ahead with your idea
- Define at least one unique selling point
- Define at least two potential risks
- Don’t assume demand, measure it
- Know your competitors
Make sure your answers and decisions are not biased, you are trying to save yourself time and money. Try designing your own feasibility template and mold it into a business project. On a general basis, feasibility studies cover ten aspects: technical, economic, financial, managerial, cultural, safety, social, environmental, political and market.
Technical Feasibility: it covers engineering, geographical, civil and structural aspects
Economic Feasibility: the extent to which your project will produce economic benefit
Financial Feasibility: the ability your project has to raise the funds needed to be implemented
Managerial Feasibility: employee involvement and commitment
Cultural Feasibility: influenced by local beliefs, cultural practices and demographics
Safety Feasibility: safe implementation and operations, minimizing environmental impact
Social Feasibility: social status quo particularities that may obstruct employee compatibility
Environmental Feasibility: consider this early on — permits, licenses and/or approvals
Political Feasibility: your current objectives VS the political system or government input
Market Feasibility: the potential of market demand, be it regional, national or international
From Practicability to Viability
“People don’t know what they want until you show it to them.” Steve Jobs
Once you have determined and confirmed that your business idea is feasible, it’s time to evaluate whether or not it can stand the test of time, and brave challenges and risks. You didn’t think you’d just jump off a cliff and learn how to make the parachute on your way down, did you? Understanding how your business idea can survive or live successfully especially under tough conditions having at least a reasonable chance of growth, is vital. The first step is to accept that you are not the market just yet… so what many entrepreneurs risk doing is selling their product before building it. Many of them strike gold, refusing to begin marketing the moment their prototype turns into an actual product. Slow and steady might not win the race here… It takes real money to sustain a business and if you are the only investor, trying to sell full price is more like convincing the market that your business model is viable before it’s proven. Planning for revenue models that will monetize later or word of mouth doesn’t always seem to work. Internet is free, fair enough but it’s best not to assume that a website will be all you need.
Along the same lines, remember that customers and investors want to be wowed and challenged during every phase or launching of your prototype or end product. Maintain the mindset that your target audience viability will unlikely be attained via technology or accounting only. A great business is far more than a great idea, website or app. Go for a more holistic approach, a total business solution and fuel it by assessing the following:
- How much working capital do I need?
- When will I break even?
- What is the lifetime value of a customer?
- What is my contribution margin?
- Do I have an exit strategy?
Going Pragmatic
“A startup is not a smaller version of a large company.” Steve Blank
In a nutshell, scalability is the easy growth of a business. You built the killer prototype, started selling an appealing product and you are serving a real need in the market; so, is it necessary to scale up? Will it come with a cost? Tips, tricks and guides aside, scalability can be a make-or-break moment. Premature or slow scaling may cause you to fail either way.
Before you take your business to the next level, identify your “core”: primary customers, minimum viable product and profitable funding. Don’t go overboard with spending, stay disciplined with your money. Don’t hire too many people: assistant directors, regional directors, site managers, division managers or any other B-Level executive needfully isn’t a stepping stone on your scalability path. There’s nothing wrong with staying small, if your product needs it. Thinking of adding new features to your existing product or related products? Try that instead. Before scaling up, your business must be everything but fragile; so, ask yourself: Can my business survive without me? If I were to disappear, could anyone fill in for me and do exactly what I do, keeping my business workable? I heard a “yes” …
Thank you for taking the time to read this article. Keep moving and stay tuned for our third Startup Blueprint blog post. Make sure you haven’t missed the first one. Click here, to read more.
