When you have an idea for a new startup, it’s tempting to do some quick research on Google and then jump right into coding.
That’s a bad idea if you want to be sure you are on the right track. Launching a product requires a lot of effort, and it can be difficult to determine whether your idea is workable.
By following the steps below, you can greatly improve the odds of success when deciding what you should and shouldn’t pursue.
First, ask yourself these questions
Before building out any business idea, consider the following questions as you evaluate your startup idea:
- What value does this offering add to the end user?
- How have others attempted this idea before, and why did those concepts succeed or fail?
- In the unlikely event others haven’t attempted the idea, why hasn’t this been tried before?
- Who are potential competitors to this concept down the road?
- What killer feature does my idea have that is difficult for my competition to emulate?
These questions are just the tip of the iceberg when it comes to conducting market research for your business idea.
But if you can’t answer those fundamental questions early on, it’s a sign that your idea may not be worth pursuing.
Examine these sources of rock-solid intelligence
Postmortems and case studies
In any area of entrepreneurship, failure tends to be viewed as a rite of passage to running a successful business.
It’s true that many lessons are best learned firsthand, but by examining case studies and postmortems (analyses of failed projects), you can avoid reinventing the wheel and hitting the same roadblocks others faced. And conversely, case studies can provide a wealth of information on techniques that can help you succeed.
While a Google search will likely turn up many useful sources, you need to assess the credibility of each. Before believing everything in the reports, make sure you consider the following:
- Is the author of this report an objective source? Articles written by founders, investors and ex-employees might provide deep insights. But be warned: These people are emotionally attached to their ideas, and they will have a bias in how they explain the events.
- Avoid survivorship bias. You should never focus only on successful startups. Success doesn’t equal perfection. Be sure to examine all sides of the issue in your analysis.
- Don’t take information at face value. Just because a paper is published in a trade journal or scholarly paper doesn’t mean that the information is 100% accurate.
Niche business databases
If you are planning to build out a technology startup, these sites can help you scope out the competition:
- CrunchBase: One of the leading startup databases on the web, CrunchBase was created by venture capitalist Mike Arrington in 2007. Today it remains a go-to resource for anyone looking for information on technology startups. Funding amounts, investors, corporate history and much more are just a few of the things you can find on the site.
- VB Profiles: Another leading technology startup database, this one created by VentureBeat. While it is similar to CrunchBase, VB Profiles is different in that it allows users to create lists of companies to track. It also allows you to view the data you collect on virtually any device.
- CB Insights: Although not a free database, CB Insights is a trusted source of information by numerous large funds. The biggest value of CB Insights is that it provides users with analysis and in-depth data around venture capital trends so you can get a better feel for what investors want when investing in a startup.
Seek out honest feedback
Although it can be tempting to do competitive research on your own, it’s important to realize your limitations as an entrepreneur.
One of the biggest limitations you need to account for is our natural tendency to overlook flaws in our ideas that are obvious to others.
If you’ve seen Sharktank, you’ve witnessed what happens when entrepreneurs take a chances on ideas they think are great, only to meet with failure down the road.
The key to getting honest feedback is to run your ideas by trusted outsiders.
The only people you should trust for feedback are those who will be fully candid with their insights. This means going direct to your intended customers and asking them about the pain points they commonly face in their daily work.
If you find that your target audience doesn’t need your product, build something else.
Otherwise take the feedback they provide and use it to improve your idea!
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