An existing business owner needs to handle uncertainty: cash flow, keeping essential staff skills, supply cost increases and even power cuts to name just a few. For the start-up founder or someone starting something from scratch the level of uncertainty can be much higher. How do you as a start up business person handle high levels of uncertainty?
When coming up with a new idea for product or service you will most likely face uncertainty in estimating customer demand, knowing what product features are required and developing a pricing model. These are some of the core issues but there will be more such as distribution, marketing and selling.
Customer demand is the big uncertainty. If you don’t know whether there is a demand for your product or service, you really won’t be able to get started. Somehow you need to find ways to get your product out into the market as soon as possible but without sinking huge sums into product development. It’s tragic when you consider the number of stories you hear about start up owners who have spent huge sums on developing a product or service only to find out that the demand they hoped for didn’t pan out.
Product development can be tricky. Think of it this way, what features will your product have? It might sound like a no-brainer but if you have too many features your product may be overpriced for your intended market and if you have too few features your intended product might not be competitive in the marketplace. To enter any markets with established competitors, you need to have a point of differentiation. If you don’t differentiate your product or service, you probably won’t go very far.
Marketing expert Dan Kennedy recently shared some tweaks to products or services that could provide innovation and produce strong results. Some of these “tweaks” included making it bigger, making it smaller, adding to it, subtracting from it, doing it faster, doing it slower, doing it cheaper, financing it, and doing it more extensively. Without going into examples of all of these “tweaks”, the basic idea is to look at your envisaged product or service and determine what features would give it a competitive edge.
To reduce uncertainty it might be useful to consider the need lean start-up principles of Eric Ries. Although these principles seem to be mainly centred around Internet plays, you can also use them for physical products and services. Basically, the lean start-up principles allow you to test the waters as soon as possible with as little investment as possible so that you can quickly learn what is wrong with your product or service and then repeat this cycle.
You need to produce a minimum viable product which is a basic, functioning version of your offering, obtain feedback and tweak it. You must react to the feedback by making changes or modifications and get your product out into the marketplace again. Then you gather more feedback and find out how to make further changes. In addition to this “build-measure-learn loop” you need to also use hard data and testing for your decisions. This would involve finding out what customers are prepared to pay for, how much, whether you should have different levels of pricing and what special features could be included but at a premium price.
If you want to get started on testing your promising business idea for product or service, then consider “Breakthrough Ideas”. It’s a practical, hands-on guide for helping you turn your business idea into a viable product or service. Coming up with ideas is a lot easier than commercialisation. If you don’t know what is required, you are really steering your idea without a roadmap. Get your copy of “Breakthrough Ideas” here.