How to tell if an idea is good & cheap

How to tell if an idea is good & cheap

Lesson Details:
February 14, 2020

Video Transcription: In this video let's talk about cheaply testing your business ideas because as you go through your process of getting theoretical feedback from potential customers from friends and family from experts the one thing that happens is that it's just too easy for people to say I like it and give you these kinds of lukewarm answers like maybe you know yes I like it those are actually not that good it's very easy to mistake them for good because we want to we want our business ideas to be good and we want people to like them so we are going to round to the positive if we're not sure we're going to assume okay maybe it's good but the reality is that if it's like a man you know if it's just I like it that's just a nice way of saying I don't really care that much so you need specifics you need people to go like wow I like it or even if they really really don't like it often that's even better because at least it evokes a reaction then just like I like it which basically is no reaction at all anybody can say that that's the easy thing to say so sometimes the technique entrepreneurs use if they're talking to potential clients is if the potential clients say yeah I like it the next set of questions would lead to asking okay if you like it that much we're just high enough to buy it now ahead of time I'll give you a discount or something like that it's not a possible thing to suggest in all cases but often and you just basically test how true is it what they're saying so that's still sort of talking about that theoretical feedback. Now let's talk about starting to test your idea in a practical sense because it's better to build the business earlier rather than later so you can start testing start learning because a cheap failure even though it's not a good thing nobody wants it everybody wants to succeed for the cheap failure is much better than sitting on the sidelines too long not failing but also not starting and this is a near truism in entrepreneurship you want to fail cheaply and learn by doing and not sit there and theoretically wonder so before you dive in let's go over a few questions that you should ask yourself just kind of last sanity checks before you dive in and start testing cheaply the first one is can you realistically pull it off I mean you might have a good business idea sure but can you do it meaning does it require some specific skills that you don't have in-house does it require resources like a lot of money man-hours some inventory or tools right like sometimes that just cost money how are you gonna get that you need to raise it's not that easy to raise money sometimes is the question of like are you entering an interesting business space like let's say you wanted to get into the newspaper industry well you better have a really good reason now because that industry is in decline so think about what ecosystem are you entering because on the flip side of the newspaper industry which is not a popular one today there is a popular one today many people get into like mobile app games there's so many people who build apps they want to get into that it's really fun it's awesome to have people playing your app but it's unbelievably difficult to succeed because there's hundreds of thousands maybe millions of games out there and most of them fail so it's a wildly competitive space so think about the ecosystem because you'll have to face the challenges or whatever ecosystem you're entering you just want to make sure that those are reasonable challenges not ones that are too difficult to overcome so let's talk about now how to do some real-world testing for your ideas cheaply. This design this is not going to apply to all businesses but maybe maybe many if you are selling products let's say you want to design clothing t-shirts or you want to sell physical products maybe on Amazon or on Shopify site well you want to start with a small amount of inventory no bulk buying the bulk buying will be out too much risk too soon the inventory would be just to test whether you were able to sell if you were able to sell the small set of inventory even if it was too costly to acquire this into inventory even if it financially didn't make sense it's just a test to minimize the bigger risk because the reality is that most people don't sell and so there they end up being stuck with this inventory and so you basically just start small but sell sooner if you have an online idea put up a basic website try to start promoting the site see how it goes also if you have to do any with video some people wait for a long time to get great video equipment like amazing camera lighting studio everything maybe have their friends film I'm but you can also figure out how to film from your phone which has an HD camera or your webcam of your laptop for free with a reasonably good sound quality on your own or with equipment that might cost you under a hundred dollars that you can acquire within days and start and begin getting the feedback so you see all these you can take a while you can go quickly and also let's say you have an online idea that's hard to promote probably there's some website that makes it easy for you for example if you wanted to do your own Shopify store you can even start selling on Amazon before you set up your Shopify site he wants to have some agency business right like marketing agency why don't you just become a freelancer for that first it's much easier to start that way and at least you get your feet wet and start learning sooner rather than later because that's the goal because a lot of the assumptions that you have while you're sitting. There theoretically dreaming about the business they go away after you start and you learn the reality of that business if you want to start a brick-and-mortar location maybe you can start more cheaply with the truck or a cart or doing that business at local fairs or events because a brick-and-mortar location is not only very costly so you will need to raise money which is extremely hard to raise but it often requires permits and licenses that are very time-consuming to get cost extra money and basically just cause you to never really get into that business because you're always waiting waiting waiting and one more thing if you're getting into some kind of a technical business like a mobile app like cool new website app idea like a startup well you can start learning to code and make what's called an MVP or hire freelancers but have them make what's called an MVP MVP stands for Minimum Viable Product it's very very very basic thing to start with so that it's cheap to create and you can launch and start getting feedback rather than over building something that's gonna be much more costly and then you don't even know if those features that you've had planned are going to be preachers that your users like or whether you can even get users for your product right so those are the things you want to answer very very early and that's why you want to go after the cheap but real world idea testing by launching something quickly.

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