Want to start a business? Answer these 6 questions first

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I often meet entrepreneurs who have great ideas, but they often don't have a clear answer on how to turn those ideas into a mature business with paying customers and an attractive market. In this article, I will discuss the first step of entrepreneurship, which is research and planning before you start a new adventure. If this step is done well, you will have a clear idea of ​​where you want to be in the next five years. More importantly, it will give you confidence when you finally start your business.

Question 1: What problem do you want to solve? And what is the starting point for its creation?

Great products solve a specific pain point for their target users. Most entrepreneurs are good at identifying latent needs of users, but this latent need must be proven to exist by people using your product and putting in a lot of effort. The formula is: high user need + medium user effort = success. The point is, most entrepreneurs don't care about putting in any effort, they just live in their own imaginary user needs, especially small companies.

Question 2: How big will your market be?

This is the most overlooked of these questions. In our opinion, you must have a clear and definite profit quality at the beginning, and how big your market will be if you have 60%+ market share, 90% market share, or whether you enjoy high network effects in your business. If you don’t have marketing experience and knowledge, you’d better seek help and guidance from professionals. Whether your profit comes from enterprises or users, is your target market segment large enough to retain them?

Question 3: Who are your competitors and industry leaders?

Don’t listen to people telling you “Company X already does this.” You’re an entrepreneur and you need to do your own thorough research. Is their product good? How much traction do they have? If they have a good start, can they beat it? At Pricena, we’ve established that no one has solved the comparison shopping problem well, and no one has good traction. The opportunity is wide open, and anyone can build the right product and a good market.

Question 4: Can you solve this problem?

If you are a technology startup, having a technical founder on your team is crucial to the success of your product. You need to understand that your bread and butter needs to be solved with technology. Assuming you already have the technical capabilities and have identified a large market, your ideas and technology are all available, will the solution you build still not be good enough? In the late 1990s, the predecessor of the iPad, the Palm Pilot, ultimately failed because it was not attractive enough, and the human-computer interface technology at the time was not perfect enough. Focus on the technology in your company's field and focus on whether your solution, whether simple or complex, can solve the potential needs of users.

Question 5: How do you promote your products and what difficulties will you encounter?

If you are the first mover in the industry, you need to solve the potential needs of users. You will be lucky because users are easily receptive to the value proposition of your information. If you are the second group of people in the early market, you need to focus on building a good enough product and focus on marketing. If you enter a market where there is already a dominant player, your product must have unique appeal to get better orders than the first batch of pioneers entering the market. As a network product, your main marketing channels are paid search marketing, SEO and social media.

For each different marketing channel, you need to understand how big of a problem and how much money it will cost to promote your product using it. For example, if you are a credit card comparison site, you will be competing with big banks with huge budgets in the paid search market. This will greatly increase your marketing costs, so if you don't have a sizable budget, you may need to focus on more cost-effective channels. But before that, you need to understand the consumer trends in the market to see how big a market you will have. If it is growing, your market environment is good and you can compete; if not, you have a product target group that has a problem and you need to rethink the design.

Question 6: Finally, do you need funding, when do you need it, and how much do you need?

There are three reasons why you need money. The first is to pay your startup's monthly bills so you can continue to grow. The second is to pay your personal monthly bills. The third is to compete and win the market. The first and second reasons require much less money than the competition. As a founder, remember that you need to be capital efficient and retain your ability to bootstrap, but if competing and winning means giving a portion of your company to outside investors, you should do it.