The thrill of a new idea has incredible momentum. It needs to have momentum, as the journey for a startup is long and difficult. That same momentum, however, can sometimes push an entrepreneur past some fundamental concerns early on, before those concerns are adequately addressed.
For example, our own eagerness to focus entirely on product blinds us to who our customers may be and what problems they have that need to be solved. Considering our customers, value proposition, etc., are sometimes relegated to “marketing and sales” that will be dealt with at a later time.
Putting off a thorough vetting of a business’s customer segments never ends well. Products are built for customers, after all. If you don’t know your customers, how do you really know what to build or that anyone will buy?
Entrepreneurs wrongly assume that they are the customer, with already perfect insight. Indeed all too often entrepreneurs spend their precious time and resources executing on a poor or mistargeted idea. A polished product that has no customers is an all too common sight. Pivoting by changing the product and/or targeting a new set of customers is expensive and time consuming. Momentum is lost.
So what is an entrepreneur to do at the earliest stages of their endeavor? We know that entrepreneurs have to build at some point. We need to have something to put in our customers hands for validation, right? Or do we? One of the first fundamental questions entrepreneurs must ask is, who is my customer? Often the startup founder will feel they know the answer, but when pressed with a few basic questions, come to realize they don’t really know much at all.
A tactic many use at this early stage is to have exploratory conversations with those who may be potential customers. The goal is to have a conversation about their pain that your product aims to solve. You are not selling them at this stage. In fact you don’t even need to mention your product/idea. Instead you are learning about who your customer really is, and determining if the pain they feel is really sufficient enough for your product to overcome the status quo.
Frequently entrepreneurs learn that their solution as currently considered is merely a “nice to have” vs a “must have.” The difference in difficulty of selling one vs. the other is extraordinary. Would your customers love your product? Would they be upset if you took it away? Would they even notice?
Understanding the value that your would-be customer receives from your product is also important. It will help drive your pricing decisions. Your pricing should be reflective of that level of value, both real and intangible. Is the cost to produce, distribute, market and support a sales team prohibitive compared to that price? Do you understand the customer budget and budgeting life cycle?
Another important factor to consider is the size of the market for your product. The lower the price, the larger the customer market needs to be. This, along with your best understanding of your product’s price, will determine if you have a sizeable market worth considering. If not, consider changing your customer segment.
If all of this sounds time consuming, that is because it is, which is why it is so often skipped, only to be regretted later. The good news is that there are programs in New Hampshire to help guide startup entrepreneurs. Alpha Loft is now taking applications for its popular six week Startup Fundamentals program. Sessions will be held in both the Seacoast and Manchester regions. To learn more about Startup Fundamentals and to apply visit http://alphaloft.org/startup-fundamentals.
Joshua Cyr is the Director of Education and Acceleration at Alpha Loft (http://alphaloft.org). Joshua also runs NH Tech Hub (https://nhtechhub.com), a tech portal for New Hampshire, and serves as City Councilor for the City of Portsmouth. He can be found on twitter @jcyr or email firstname.lastname@example.org.