September 08, 2020 | 5min read
How to Know a Business Idea is a Good Idea
Have you ever had an idea for a business? Of course! The excitement, getting a little lightheaded, basking in your glory, the dollar bills floating around in your head… “No way, someone has already thought of it!” A few days later, the everyday routine comes back, and you put the idea on a shelf. You can make it a reality some other time… A few years later, you accidentally see a website or an app applying your exact idea!
Thomas Edison used to say that, “the value of an idea lies in the using of it.” How to go about it? Where to start? How to know that it is even worth starting?
“The value of an idea lies in the using of it” - Thomas Edison
At Utilo, we work with clients at different stages of digital product development. We help clients find the answer to the questions and issues below so that our projects are as effective as possible and become successful when entering a market or introducing strategic changes to existing products.
Take a look at how your idea is realized in your country or abroad. Most probably, your product is not unique in all its aspects. Usually, there are similar products or solutions already on the market. And that’s a good thing! You can draw inspiration from that, check the results—whether the business potential is actually there and how it’s developing. Moreover, people might be used to the product or service and understand it quite well. If you are creating something completely innovative, you must realize that a considerable marketing budget might be necessary to explain to people what your product does and why they should trust it.
It happens that business ideas come to us when we identify a lack of a product that we would happily use if it existed on the market. The temptation to think that others feel the same way is really high. However, it must be verified: people at what age, of what sex and income might be potentially interested in the product? Count how many people like that are there and how to reach them. It is a good idea to talk to them and research their needs when it comes to similar services. It is important that those people are objective and not part of the “friends and family” group, and they will not hesitate to criticize the idea. Of course, you will never be certain what percentage of your target group will use your final product, but thanks to such actions, it will be easier to define the brand, estimate the potential risk, the cost of architecture and the technology to be used.
According to Donald Miller, the most successful products answer basic human needs like survival, acceptance, love, identity, and belonging. If we address at least one of those needs on our website, the user won’t have to take time to understand why the site is worth his/her attention.
“People don’t buy the best products. They buy the products they can understand the fastest” - Donald Miller
When considering what problem your product solves, define the internal and the external problem.
External problem—in a movie, it would be a ticking bomb, a leaving bus, or a win in a competition. In business, the need for new clothes, insurance, or a car. Usually, external problems come quicker to our minds.
Internal problem—in a movie, it could be a story about a hero who needs to win in a competition but lacks faith in his/her abilities – which is his internal problem. In its first campaigns, Apple emphasized how simple their computers are in use to address the concern that computers are too complicated for “non-technical” people.
Think about how Starbucks made people pay for coffee $4 instead of $0.50. Apart from coffee, you can have a nice time in a relaxing environment, feel satisfied and happy. Starbucks wanted to create groups of people who meet in local coffee shops. It was a significant change for the American people—thus far, they were meeting in dinners or bars. Starbucks addresses their internal problem very well.
Starting with the internal and external problems, think about the deeply rooted frustrations that your products want to alleviate. Maybe you can stand out from the competitors thanks to much better client service? Or maybe, like Revolut, operating in an industry that treats clients using one scheme, you could introduce an innovative process of account creation and management?
Unique Value Proposition—it’s a characteristic or a value that separates a given company from the competition in an industry. It influences the decision of a client who analyzes available offers for similar products or services. The UVP needs to be objective and clear—something that is easy to explain and constitutes value for the clients.
When you define the Unique Value Proposition, it will be easier to determine the most important feature of your product, and thus, where to begin the implementation. That feature will be the key when building the Minimum Viable Product (MVP), meaning a version of the product that—with minimum technical effort, enables to obtain the most insights. We create MVPs to reach conclusions—who are interested in our idea, how he/she is using it, what are we missing, and more. Since the development of websites and mobile apps involves high costs, it’s worth starting with an MVP to verify the product before giving the go-ahead to a big investment.
A “sell it before you make it” approach can be a good way to verify the interest. The Lean Launch enables users to check if the target audience intends to purchase the product. For this strategy to work, you will have to have a basic version of the product that can be sold.
Does your target audience can pay for your product the amount you need to make a profit? At what scale? Or maybe there is a financial model or payment method that will be more convenient for the users and, at the same time, yield good results for you? The subscription model has become increasingly popular. It’s safe for both parties involved: clients can cancel at any time, and the companies create a database of continuous orders. Spotify, Netflix, or our client Your Kaya applies this model. When redesigning the York Kaya e-commerce website, we emphasized the advantages of using the subscription model to increase orders. You learn more about that project on our Behance.
If you are interested in working with Utilo, contact us—we will be happy to show you how we work and listen to the challenges your company is facing.