The Three Questions That That Can Help You Turn A $1.000 business Idea Into A $1M One
We all fall in love with our business ideas. It's just human nature. In the beginning, we believe that its potential is enormous and risks are zero. Everything seems so clear and positive.
After a week or two, we start to have the first doubts and fears. What if it doesn't work. What if nobody buys? Etc.
So, we decide to ask our friends what they think about the idea. If they get excited, we are in love again. On the other hand, if they don't like the idea, we try to defend it and argue with our friends, but deep inside we are hurt that they don't like it.
I've been through this process countless times. It's very dangerous because the idea relies on the opinion of our friends (which is irrelevant in most cases and I will explain exactly why later in the article).
After some time, I realized that there is a better way to assess my ideas. So, whenever I have a new idea, the first thing I do is ask myself these three questions:
1. Who is my target market?
2. Can they pay?
3. Will they pay?
I further explain the question below, but I need to clarify one thing before we dive into examples. The following questions are the first filter I use in rejecting bad ideas or improving them. This is by no means the one and only filter you should use. For further validation of your idea, try to do mini-research, create a prototype and sell a product.
FIRST VERSION OF THE IDEA
So, let's have a look at each of these three questions in detail by using one example. Let's say that you want to organize a workshop titled: How to become fluent in German language? Furthermore, let's assume that you are a student so your initial idea is to organize these classes on your university campus and charge 250$ for 8 classes. Now, let's answer the three questions.
1. Who is my target market?
In this case, your target market are fellow students; probably both female and male.
2. Can they pay?
The majority of students have almost no money (for the sake of this example, let's assume you don't go to a posh university with rich kids). So, how much of them can pay 250$? Sure, you can win some students, but it will be a huge struggle.
3. Will they pay?
The best way to answer this question is to look at your target market's current spending. Students spend most of their money on clothes, food, gym, fashion and going out. So, the probability that someone will have the money and also be willing to pay for your class is small.
THE ITERATION
I am not saying that the idea is complete rubbish. Just realize that it will be really hard to make real money with it. Why not slightly adjusting your idea and so drastically improving its potential? So, let's say that you will do a small pivot. Instead of focusing on students, your will choose kids (age: 7-14) that attend private schools.
1. Who is my target market?
In this case, your target market are PARENTS of those kids. See where I am going with this? :)
2. Can they pay?
Of course. They have their kids in private schools. It is a good indication of financial strength.
3. Will they pay?
They want their kid to have the best education. They already invest a lot in him by sending him to a private school, sports, summer camps, etc. So, yes. There is a realistic chance that they will pay.
Chose your target market wisely
Notice how a small change in a target market and positioning can have a huge impact on a potential of your business idea. You could probably charge even more than 250$ if you target parents of rich kids.
P.S. I owe you an explanation. In the introduction, I wrote that asking a friend for an opinion usually doesn't make sense. This is true when your friend is not your target market. In this case, his opinion is almost worthless. If you want a real opinion, you have to go straight to the source - your potential customers.