Billion or Bust? 4 Questions to Assess the Strength of Your Business Idea.
Grow Your Business, Not Your Inbox
While the health crisis is far from over, the business world and consumers alike have mostly overcome the “survival” phase and are starting to adapt to what it will mean to live and operate, post-pandemic.
Now faced with a “new normal,” budding entrepreneurs are reassessing business ideas that had been on the backburner and exploring their potential in the current circumstances. But while many businesses have successfully launched during times of economic downturn — Mailchimp, Airbnb, and Whatsapp, to name a few — that doesn’t mean it’s the right time for everyone.
When it comes to post-crisis strategic thinking, aspiring business founders must consider how the needs, wishes, and budgets of consumers have changed for the long term. So if you think your business idea has potential, ask yourself these four questions to determine its strength in today’s landscape:
Do you fit into the new normal?
Business as usual is off the table, at least for a while. If you envisioned your business idea before the reality of the pandemic hit, you should reassess whether the market needs it just as much now as it did then — or even more so.
Look at your unique selling point (USP) and value proposition in the shifting markets. Ask yourself if this situation has made your product or service essential to consumers, or if it’s seen as a luxury now that people’s priorities have changed.
If your business is reliant on in-person customers, it’s going to be difficult to launch right now. If you can adapt this to an online-only format, you’ll stand a much better chance at getting customers. But entrepreneurs who can make their idea digital to fill the new market niche still need to avoid tailoring their product too much.
“Be careful not to design a product specifically for COVID-19 needs if you’re seeking to build a long-term business,” advises Gabe Zichermann, entrepreneur and CEO of Failosophy. “Recessionary startups require different strategies, but shouldn't focus solely on the recession at hand.”
While some of the uptick in demand for certain products will subside once isolation measures are completely relaxed, many of the shifts in consumer preferences will remain. For example, the crisis has acted as a catalyst for digital commerce, buying local, and more conscious shopping. Now that people have adopted these trends and seen the benefits, they are unlikely to return to previous habits.
“No founder or budding entrepreneur should be thinking they can just ride this crisis out, and not make any lasting changes to their product, marketing or messaging,” says Jonathan Greechan, co-founder of the world’s largest pre-seed accelerator, Founder Institute. “Their playing field will be radically different even once we return to ‘normality.’”
How crowded is your market?
The issue of market saturation still applies, even in times of crisis or economic downturn. While many startups that launched during recessions reported that it was easier to stand out due to fewer competitors, market research is still as vital as ever.
Ed McCabe, Chief Sherpa at Loeb.nyc, advises that founders who are looking to launch right now take a close look at potential competitors in the space. “Don’t try to be the ‘new Uber’ in an already saturated market. On the flip side, if you have an idea and no one else is doing it, this could also be cause for concern,” he says. “If this is the case, ask yourself: what is it that I don’t know?”
If you feel like your idea strikes the right balance between a crowded market vs. no competition, do some digging and find out if other companies tried and failed to launch with the same (or similar) concept. If so, what factors led to its demise?
“When you see a lot of companies camped out around an idea and they fail, it’s not necessarily because the idea was defective. It likely defected around the execution, or they could have simply burned through capital,” argues Michael Loeb, serial entrepreneur and founder and CEO of Loeb.nyc. That way, you can use would-be competitors’ mistakes as lessons on what not to do with your own launch.
How clear is your niche?
Finding a clear niche for your product is always important, but during uncertain times, it’s crucial. Amanda Patterson, a licensed mental health counselor at Caring Therapists of Broward, stresses that “you have to think about the total addressable market and audience. Think about specific groups of people and what has changed for this group.”
During COVID-19, the specific needs of various groups within populations and across industries have shifted drastically. Now, avid gym-goers are snapping up home workout equipment, while previous 9-5 office staff are investing in their home desk set-up.
“The more specific you can be in who you’re targeting, the better. For example, working mothers who are now homeschooling their children is a defined niche that has just blown open as a target demographic,” adds Patterson.
While it’s true that big online sellers such as Amazon have seen a big boost to their sales as a result of the pandemic, the changing circumstances have also benefited those niche brands that address a distinct sector within the market.
What do people think about it?
The best way to work out how good your idea is is to simply ask people. And while family and friends’ input can be valuable, you’ll also need to ask strangers — or at least unbiased acquaintances. Gabe Zichermann advises fellow founders to “validate the idea with people who are disinterested third parties, but fit your target profile and are potential customers or investors.” Here, social media is your friend.
“Talk to potential customers using online surveys or social media,” adds Patterson. “But you have to make sure you’re not just designing the survey to validate the idea. Try to get into the psychology of respondents and identify their pain points. You may even find that another idea comes out of it.”
McCabe also emphasizes this point: “don’t frame questions to get the answers you want. You need to be careful and have a healthy dose of skepticism when it comes to getting feedback.”
“Anyone worth their salt needs to be actively networking — if finding users for research is a barrier, you won’t make it as an entrepreneur,” he adds.
Ultimately, it’s those companies that adapt to address a clear market need and shifting consumer preferences that will succeed in launching a business during the new normal. However, in order to increase their chances of long-term growth, they must take another vital lesson from the pandemic: Agility is key.