Taivara Blog Post by Brooke
5 Steps Entrepreneurs Use to Evaluate Innovative Ideas
If you’re going to evaluate innovative ideas, there are several things to looking at. My focus today, however, will be on helping entrepreneurs determine how well an idea aligns with their goals and if the idea owner fits with their motivations and expectations.
Step 1: Understand the innovative idea
Is it a business concept that you “get.” Are you familiar with the pain point it’s trying to solve and does it resonate with you? You are the one who will be selling this idea to investors, business partners, clients. Your connection to the problem will help you personalize the opportunity and sell your solutions.
Step 2: Evaluate the idea
The next step is to complete the business evaluation. A business model canvas is a good, lightweight tool to help you get many of the dependencies captured in a single page document. Other key questions should be answered as well.
Is the market big enough for your goal? A lifestyle business may be your goal, but if you’re seeking venture funding – there has to be a significant return to those investors.
Is it a market that you can access – do you have connections there? Your ability to deliver that first customer will provide essential momentum to your business.
What are the barriers to entry that you have to overcome? Make sure you know the main obstacles. The better prepared you are for the obvious challenges to your business, the more resilient you’ll be when the less obvious ones present themselves. And they will.
Step 3: Get help from others to evaluate the idea
Don’t worry about the idea being stolen, you need to share it instead – especially with people that are potential buyers. It’s not just the first step in validating the concept, it’ll help shape your earliest version of the product – and that’s when your learning accelerates.
Step 4: Customer validation
Look for ways that you can validate the concept. The best is to sell your first unit, either through a consulting engagement or prototype. People often overestimate how willing they are to use a product when asked about it. Getting a commitment to pay for something is real validation. If you can’t do that then poll prospects & experts in the industry is still a worthwhile effort. They can help establish if your earlier analysis is correct.
Step 5: Is this an idea you can live with?
At least as important as the idea is the person with the idea. Who came up with the idea?
If you’re not the idea person, how does that person or institution align with your interests? How much capability does the idea person bring to the execution side of the venture? If none, it’s not a show stopper, but you will need to account for this as part of your planning. If you’re likely to be spend a lot of time together, or be heavily dependent on them – you’ll want to know you can work well together. Building a business is not a stress-free environment, you’ll want to be prepared to navigate the challenges ahead.
If you’re the idea person and you need others to help you execute, then be respectful of their time during the early stages of discussion.
Keep in mind that there are a lot of ideas and idea people out there. Not all ideas are equal and not all idea people are entrepreneurs!