If you’ve spent lots of time using the methodologies in part 1, you should have quite a few nice ideas by now. However you can only really build one of them. So how do you select the best one of them?
SWOT analysis
The first thing you can do is a SWOT analysis. SWOT are the initials of the words: Strengths, Weaknesses, Opportunities, Threats. It is a strategic planning technique that you can use to evaluate ideas and projects. SWOT starts with creating a 2×2 matrix as you can see in the image below.
The four parts of SWOT as described in wikipedia are as follows:
SWOT assumes that strengths and weaknesses are frequently internal, while opportunities and threats are more commonly external.
Strengths: characteristics of the business or project that give it an advantage over others.
Weaknesses: characteristics that place the business or project at a disadvantage relative to others.
Opportunities: elements in the environment that the business or project could exploit to its advantage.
Threats: elements in the environment that could cause trouble for the business or project.
This matrix will give you a more complete picture of the overall attainability of the idea. So if you apply this analysis technique to every idea you will eventually end up with only a few.
Real world validation
When Zappos was created, it didn’t own any inventory at first. They were making $2000 on orders every week but not making any profit. The reason was that every time an order was placed, the owner would buy the shoes from a local store and then ship them to the customer.
At first the goal was not to create a business but to validate the concept. It didn’t matter if there was no stock and no warehouses, but if people were willing to buy shoes online.
Dropbox founder Drew Houston had created a prototype of the now famous file sync app. But it was full of bugs and far from perfect. So he created an explainer video and released it on Hacker News website back in 2007. This was before the app was ready. It served the same purpose as the Zappos example above. Validate the original idea.
Building a proof of concept
You may have heard the quote: “In theory, theory and practice are the same. In practice, they are not”. Your idea, your assumptions, even your SWOT analysis, all that… That’s the theory. But the business you want to create? That’s practice.
The concept of idea validation is to put a little practice into our theory to see if it holds up in the real world. Doing so is very easy but it’s much more important than what you realise right now. After all there may be benefits and knowledge in building something. But the rewards are huge if what you’ll be building is also of interest to other people.
It’s post Covid era so you can expect that people will find your idea online at first, even if it’s an offline business. So the first step to idea validation is to create a website. It doesn’t have to be professionally designed although it should be what we call “presentable”.
If you have no idea how to create a website, start with a blank piece of paper. Put the main items in place, like a menu, some text and draw some pictures. This process is called wireframing. You can then turn this wireframe over to a professional designer to get something that looks like a full blown website.
The text in your website should describe your business and what your customer will be getting. The pictures are of less importance but it helps if they are pictures related to your product. Are you making an app? Put up a screenshot of your designs. Are you planning on selling something? Put up pictures of your products (even if you don’t have them yet).
The most important part of your website is the CTA. It stands for Call To Action and it’s the button that people will be clicking to request what your service offers. If you’re making an app it should be a “Sign Up” button. If you are selling products it should be a “Buy Now” button.
Buy a domain name and some cheap hosting and upload your website online. Don’t worry if you can’t find a great domain at first. It’s not important. Also don’t worry if you can’t find a .com domain but only a .net or .io or something else. It’s also not important at this point.
Now with your website online it’s time to drive some traffic to it. Make an account in Google or Facebook ads and set up a small budget. Something in the range of $100 to $500 depending on your abilities. Write some copy for your ad and hit publish.
Make it so you get an email when someone hits the CTA on your page. So after the campaign ends it’s time to do the maths. How much hypothetical money did you make? Subtract the money you spent on advertising and you have an idea of the likelihood that your idea will be a successful business.
I know that perhaps you feel a little confused right now. How to buy a domain? How to connect it with web hosting? How do Google ads work? Unfortunately explaining these concepts is outside the scope of this article but I’ll do my best to cover them in future posts. Until then Google is your friend!