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From idea to business: 5 tips from Josh Kaufman

Josh Kaufman’s book “MBA for himself” is included in all “master reads” that have been compiled by eminent experts in recent years. The reason for the popularity is quite understandable – the author claims that to successfully start your own business you do not need to spend thousands of dollars on special education and get an MBA. We have selected some interesting points for you from his book on how to go from an idea of creating a company.

The foundation of business is value creation

The world is full of opportunities to improve the lives of people, and the task of the one who went into business is to find out what others are missing and find a way to fill this gap. The best companies in the world are those that create the most value for others. Someone is thriving, embodying the small needs of a large number of people, and someone is doing a fair job for a few.

Each business consists of 5 components:

  1. some value is created and delivered to the consumer;
  2. what consumers need or want to buy;
  3. at the price they agree to pay;
  4. in a way that meets their needs and expectations;
  5. so that the business brings the owners an income sufficient so that they consider it appropriate to work on.

Find out what others need for transforming your idea to business

Since the key to a successful business is the creation of value, it is logical that you need to find out how you can be useful to other people. There are four basic needs that have the greatest impact on our decisions and actions.

The first is the need to acquire. Based on this need, retail enterprises, brokerage and consulting agencies are created – companies that promise to make the consumer rich, famous, influential or help them gain this or that power.

The second need is to make connections. Restaurateurs, conference organizers, and dating services creators work on the basis of this need.

The third need is to comprehend. The creators of training programs, book publishers, organizers of training seminars and creative workshops, as well as companies promising to give the client new knowledge or make him competent in one area or another, make money on it.

The Fourth – the need to protect. To meet this need, companies that are involved in the installation and maintenance of alarm systems, various insurance companies, training courses in martial arts and other types of self-defense, as well as companies providing legal services, build their business. In other words, those who promise to take care of our safety, solve problems and prevent troubles.

There is a fifth need that many experts miss. This is the need to feel. On the basis of this need, there are cinemas, concert halls, companies – organizers of various kinds of games (gambling, moving, intellectual, sports), gyms and stadiums. In short, those who offer us tickle our nerves or experience pleasure or anticipation.

Remove the veil of secrecy

You have identified the problem of a certain audience and figured out how to solve it. Everything seems so perfect. But do not rush to run and invest the accumulated money in new business.

The ideal option is to create a prototype, a preliminary example of how your business proposal will look. This can be a model as such, a computer model, a graph, a block diagram or a page of text that talks about the features and advantages of your offer. And you don’t have to try especially hard: all that is required from the prototype is to give an idea of ​​your proposal in any tangible way so that potential consumers see that you have done enough work and give feedback.

For optimal results, it is better to make a prototype in the same form in which the finished product will be. If this is a specific product – let it be a prototype. If the site is a working web page with basic elements,  if the service – draw a diagram of what will happen in the process, and then imagine the process in action. The more realistic the prototype, the easier it is for consumers to understand what you are trying to do. If it comes out completely unsightly or incomplete, do not worry: it should be so.

Ask as many people as possible about your idea

So, you have a prototype that will help you more easily get feedback from potential customers. Useful feedback from real, live potential buyers will help you figure out how your proposal meets their needs before the development is complete, which means you will have time to make the necessary changes before you start selling.

Here are some tips to maximize your feedback:

  1. Try to find out the opinion of ordinary consumers “from the street”, not relatives and acquaintances. The inner circle, of course, wishes you to succeed, and it is also important for them to maintain good relations with you, so that, perhaps unknowingly, they will “sweeten” their feedback.
  2. Ask questions with a detailed answer. The best option is short questions starting with the words “who”, “what”, “where”, “when”, “why”, “how”. Observe what respondents are doing and compare with what they say.
  3. Be calm and balanced. To ask what real consumers think (and only their opinion is useful), you need strong nerves. Who is pleased to hear that their child is not as good as one wants? Try not to show that you are offended and hurt when someone tells you about the shortcomings of your creation – in fact, a person provides you a great service.
  4. Take what you hear without undue seriousness. Even the most discouraging responses of potential consumers can contain extremely important information and will help to make your offer better.
  5. Give potential buyers the opportunity to pre-order. It’s one thing to say, “I will definitely buy,” and it’s quite another to get a wallet or a bank card and order it. If you do not find anyone, you will understand that there is still work to be done.

Test your business before it starts

Shadow testing is the process of selling a product or service before they gain real-life and cease to be a project. Real consumers and potential consumers are not the same things. Shadow testing will allow you to get vital feedback from customers that you won’t get in any other way: it will show if real consumers will pay for what you are going to offer. In order to minimize the risk that you will take when opening a business, you should start collecting information from real buyers.

Suppose you decide to open a yoga school. Your actions will be as follows:

First step. You need to create a simple website where you can find out some details about the school: location, approximate work schedule, names of teachers, prices for a subscription. A filling form should be opened here: a visitor enters his plastic card details and immediately acquires a subscription to a new school. By filling out the form, the consumer acquires an annual subscription from the opening day, but with the option to refuse within the first month if something does not like it. If the school does not open, all the money will be refunded without any fees.

Step Two. Attract potential customers to your site. To do this, you can distribute flyers, the campaign in person; place a banner in a search engine.

Step Three. Track how many people fill out a full pre-order form on the site or request additional information. It takes a few hours.

As a result, you will find out how truly such an institution will be in demand.

Ideal – after shadow testing, forgive the field tests. Software development companies such as Microsoft and Google are testing new products on employees’ computers before launching them on the mass market. This form of field testing allows you to identify and eliminate software flaws before the buyer sees the product.

Using your product is the best way to improve the quality of what you offer. Become the most active and demanding consumer of your own product and all other ways to make your offer better than it was will be the only one that is blacked out.

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