Everyone has a few ideas for a startup company. But how do you know if this is the one big idea you should do? There are hundreds of questions along the way, but these four fundamental tests will help you decide if you should take the plunge.
Is this something I MUST do? – The decision to start a company is a lot like the decision to get married. Don’t do it unless you are passionate about it, and can’t think about anything else. If you have a couple ideas, one of them should emerge and dominate your thoughts. When you can’t think about anything else, and you can’t imagine not doing this…you are ready for the next test.
Will smart people join you? – We can all get carried away with our own ideas. But, the real test is, will other smart people drop what they are doing and join you. This is much harder than you might think. Smart people who will take risks are usually already busy with something they think has great potential. If you can convince one or two great people to join your crusade…you are ready for the next test.
Do users love your service or will customers pay? – You need to clearly understand your target market. You need some early indications, perhaps in a private beta test, that users love your product or service. Traction with users is a good test for your idea before you spend too much money. If you have some validation and traction with users…you are ready for the next test.
Will investors give you money? – Most people think raising money is the biggest problem. But, if you get the first three tests right; the idea, the team, and the market segment, then raising money is much easier. There are hundreds of Venture Capital firms, and thousands of Angel Investors who are looking for opportunities. Two things to remember about investors; they invest in businesses they understand, or in people they know. So, start raising money from friends and family.
Then target investors who have experience in your market segment, or know you and your team. For more tips on how to pitch investors read; Why VCs say no 99% of the time, and How to pitch your company.