How to make evidence-based decisions as a start-up without losing your shirt — A Primer
Are you interested in starting a new business but are unsure how to make evidence-based start-up decisions? There are many things you need to consider when making start-up decisions, and the process of coming up with a plan for launching a new business can be difficult.
Here are some tips on how to make the right decisions about your start-up business.
One thing to keep in mind when making start-up decisions is the “Start-up bottom line.” The start-up bottom line is how much money you are going to spend to experiment and test your idea. It is an important part of the process because the amount you invest will affect your viability runway i.e. the amount of time you have before you run out of money.
As a start-up, you need to keep all of these factors in mind when making startup decisions, think of the bigger picture but focus on your core customer and problem segments, get out of the office and learn directly from customers so that you can get a sense of what your overall goals are when you are making decisions around the next steps.
Another consideration when making startup decisions is what you need to do to get started. For example, if you want to start with a product, don’t go out and purchase or build this, develop an offer which you can put in front of customers to gain feedback and to continue your experimentation. You may feel the need to purchase your product first to determine whether or not this will be profitable, and you may also need to get some training in the product before trying to sell it, this is counter-intuitive and leads to waste. This may seem like you are reducing your options, but you will have a better chance of having a successful business by researching your product thoroughly with customers and finding out how it works.
As you create your product, you need to make sure that it is something you have a high likelihood of selling. To do this, you need to spend some time finding out whether or not your product has a high probability of selling. Test the desirability factors of your product.
You need to research your competition, you can find this information online but also check with friends or family members who have products or services similar to what you have, although only use this as a gauge as these sources normally have a high level of bias in the findings.
After you have decided on the products you want to sell, it is time to research your pricing structure and determine if you can offer a good value to your customers. Again, check what your competitors are charging, build your pricing and inform potential customers of this at the start, this will give you much more opportunities to judge your structure.
As discussed, It is a good idea to do some market research. As discussed, you may want to find out if the product or service you are selling is popular, and if there are any current products that suitable alternatives. This will allow you to be prepared for potential problems that could arise. This information will also allow you to test out the product before you launch your business. You will be able to determine whether or not the product has the potential to be profitable, and whether or not it is appealing to your target market.
You also need to know how many potential customers you need to make the business viable over a time-boxed period. The more potential customers you have to start with, the more likely it is that they will be interested in buying your product, and the more likely you are to have a successful business. Be realistic about your target market and how many people you need to start your business with. Think about your minimum success criteria and not what you think you want to hear.
You also need to consider your financial capabilities. You need to figure out how much money you can afford to spend on your start-up. My advice would be to start small and cheaply, learn and then start spending any of your financial resources. Use the technique called Pretotyping, which allows you to determine if you have built the right it before you build it. This will expand your runway of financial means allowing you more breathing space at the start of your journey.
You also need to know the basics of advertising. How will you advertise your product? what channels will you be using? Where are your customers hiding?
If you want to create a network of customers, you need to determine how you will advertise the product. Advertising may be in the form of brochures, flyers, direct mail, or an Internet advertising campaign. My advice is to not spend any money on paid adverts at the start, use your social media channels to test your value proposition and then gauge the level of feedback. Although social media advertising is not free when you factor in your own time spent, it’s still a lot cheaper and more efficient than Google/facebooks adverts etc.
This is only a primer for making evidence-based decisions, I will be posting more in-depth articles on this subject in due course and if you have any questions, please do reach out to me.