By Fernando Berrocal

It’s a cruel fact that most startups that are created fail and go out of business within five years of their beginning. Examining your startup ideas extensively is one method to greatly improve your chances of startup success. Pre-evaluating ideas will help you avoid some of the common mistakes that entrepreneurs make, as well as demonstrate to investors that you have done comprehensive study and planning.

 Understand your market and competition.

Evaluate the broader needs or desires your product meets for particular consumer categories to see which ways startups are currently addressing the same problem you are trying to tackle. You may then identify your rivals in the same categories, as well as their competitive strengths and shortcomings in comparison to yours. Speaking with founders or investors who aren't direct rivals but have produced goods for the same industry is another way to evaluating the target market for your product. Their knowledge and opinions might be extremely beneficial to your startup. 

Only after you've completed your research and evaluation can you distinguish your startup and determine your competitive edge. To achieve momentum and sales, your product must often be better, cheaper, or easier to purchase. Consider Uber: their service stands out due to the simplicity of purchasing, which has given it a competitive edge that has helped it become a success.

If you can't find any products that meet the same wants or desires as yours, or if all of your rivals address the problem for free, the lack of revenue-earning competitors implies that your product doesn't fulfill any need or desire that buyers are ready to pay for.

Is there a market for your concept?

You should consider the size of the market once you've identified a possible client group for whom you may meet a demand. You may calculate 3 points to determine the market potential of your startup idea: the “Total Addressable Market” (TAM), which is the market's actual value, the “Serviceable Available Market” (SAM), which is the portion of the addressable market to which you'd like to sell your products, and the “Serviceable Obtainable Market” (SOM), which is the portion of the market that you expect to be able to capture.

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To calculate the total addressable market, you first must determine the total number of prospective customers as well as the customer's projected lifetime value. Finding the entire number of prospective consumers might be challenging, and how you go about doing so depends on your client group. If you're lucky, you might be able to get a direct estimate of the number of prospective consumers using statistical data.

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Getting input on your startup concept and analyzing it.

One of the most important aspects of pre-startup research is talking to as many potential consumers as possible to have a better understanding of their daily lives and concerns. When evaluating a product's sales potential, it's crucial to determine not whether or not prospective clients are interested in your product, but why they would or would not be willing to pay for it. You can't assume people want a product just because you feel it's valuable or not because your view of your product may differ from that of your potential consumers, it is useful to obtain as much customer feedback as possible.

Since pricing influences who your possible client group is, the selection stage is also a good time to start thinking about pricing strategy: it may seem obvious, but you mustn't produce a product that your prospective customer can't afford. On the other hand, if you're targeting a wealthier audience, there are solid reasons to set your rates strategically high. Evaluate the comments and utilize them to improve your startup strategy. Critical feedback may be especially beneficial since it might alert you to serious issues with your startup that you were previously unaware of.

You might even locate someone you trust who is ready to play devil's advocate and try to persuade you not to start your startup. You may not be ready to or need to fix all of the difficulties raised by the devil's advocate, but you must be aware of them. You may also find that investors might ask about these problems. In this way, the devil's advocate exercise encourages you to think about your startup's vulnerabilities ahead of time, and it also prepares you to defend your plan in front of possible investors if you provide well-researched replies.

It's not essential to be concerned about your ideas being stolen when getting input. Concentrate on developing it and taking advantage of your first-mover advantage. One method is to introduce a Minimum Viable Product (MVP) as soon as possible to gain a head start on client acquisition, and then continue to develop and improve it as quickly as possible to stay ahead.

In regards to getting used to your first-mover advantage, make sure that your startup owns all of your relevant "Intellectual Property" (IP) including your competitive advantages so that your IP contributes to the startup's value and prevents your competitors from utilizing what you produce. Customer research will not only help you convince angel investors and venture capitalists to invest, but it will also help you determine whether there is a market for your startup idea. If there isn't, you must accept this as well, so you may focus on topics that are more worthy of your time.

Ready to bring your startup to the next level? Apply to MassLight’s next batch. MassLight supplies capital and a dedicated tech team. We take equity in return. Have questions? Refer to our FAQ page.

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