I did a workshop with 5 early stage companies this week. Here are my questions during the session, I hope this would help you get clarity on your business too.
- What is the problem you are solving?
- Is the problem painful enough?
- Who is your customer?
- How many potential customers have you spoken to?
- What is your ideal customer profile?
- How much will your customer pay?
- What is the cost of your solution?
- What is your business model?
- How do you reach your customer?
- What is the market size?
#1. What is the problem you are solving?
Clearly articulate the problem and convince us the problem is real. Don’t jump straight into the the technical details of your solution, or start a product demo.
#2. Is the problem painful enough?
Which one would you seek treatment first? A knife wound on your stomach bleeding like crazy, or a paper cut on your finger. Will you pay for a patented world class paper cut treatment using some cutting-edge technologies?
#3. Who is your customer?
Who will pay for your solution? If no one is paying, there will be no business, period! Think about who your customers are, why do they have the problem, where do they hang out etc.
#4. How many potential customers have you spoken to?
Ask your potential customers questions to validate your idea. Don’t spend $100k to build the prototype first. You could even sign up a few pre-orders this way.
If you can’t find any potential customer to talk to now, how are you going to find them to sell to later?
#5. What is your ideal customer profile?
You can’t focus on your customer acquisition effort if you don’t know who you are selling (or talking) to clearly.
Read: http://sixteenventures.com/ideal-customer-profile
#6. How much will your customer pay?
If you solve a $10 problem for your customers and charge them $1 for it, then this will be a viable business. At what point is your solution too expensive? At what point is it too cheap and your customers will start to question the quality?
#7. What is the cost of your solution?
If it costs you $1 to make and you are charging your customers $10, then this will be a sustainable business. What is your margin?
#8. What is your business model?
Lean canvas is a good tool to visualise your business. The left hand side of the canvas is everything around the product, and the right hand side is the market. The holy-grail of a startup is to achieve product-market fit.
Watch the video in the first module (free) here https://leanstack.com/bootstart-foundations/
#9 How do you reach your customer?
Depending on your target market and the average revenue per customer/account (ARPA), here are 19 channels for you to explore https://zapier.com/blog/acquire-customers/.
#10. What is the market size?
This is to set a floor and ceiling on the revenue potential of your business. How many ideal customers have the same problem in the world? You can find this number in various market research reports. Define it using the top down and bottom up approach.
Read: https://www.thebusinessplanshop.com/blog/en/entry/tam_sam_som
