The Honest Guide to Starting a Business – Article #1
One of the toughest things to get right when starting a business is receiving honest feedback and analysis on validating your business idea. The natural first step for many founders is to talk to their immediate family and friends who, by their very nature, are biased to like your idea because, well, they like you.
In psychology this is called the Liking/Loving Tendency. People tend to ignore the faults of the people, products or companies that they admire. On the other hand, we can be over influenced by other people’s thoughts and opinions on our business. This is called Social Proof Tendency. People can place too much emphasis on what others think, say or do, rather than on the facts of the given situation.
Many of the world’s top entrepreneurs, like Elon Musk, believe in reasoning from 1st principles rather than by analogy. Overemphasis on things like competition or current demand is a sure fire way to copy your closest competitors and miss out on hidden competitive advantages.
When starting a business it’s important to validate your idea with a mixture of cold hard facts and feedback from people who aren’t naturally biased toward you. When you are confident with the level of facts and feedback you have, then your personal belief in the business transforms into real world validation.
5 steps for Validating your Business Idea:
- Ensure you have a personal passion for the idea/industry that will last
- Lay out the facts and ensure your sourcing information from reputable sources
- Start from the customers needs/experience and work backwards to refine your idea
- Put yourself in the customer’s shoes – “would you be happy to receive this if you were on the other end?”
- Seek as much feedback as possible from potential users of your product or service
The above 5 steps can bring clarity to validating your business idea and instill confidence for you to move forward.