So you have a great idea for a startup, but are you sure the marketplace is ready for your product?
Experts say that figuring out if your product or service “fits,” or satisfies a need in the market, is the first step to building a successful venture.
Here are some tips from a recent webchat hosted by the U.S. Department of State’s Global Innovation through Science and Technology (GIST) initiative. (The webchat is also available with Spanish and French subtitles.)
1. Understand your potential customers
The biggest mistake entrepreneurs make is thinking they can determine their customers’ needs without talking to them, said Steve Blank, a serial Silicon Valley entrepreneur and a professor at Stanford University.
Talking to potential customers also helps you find out if they are willing to pay for your product, which could potentially lead to long-term business.
2. Define your competitive advantage
It’s important to think about what your product offers that gives you an edge over your competitors. That can range from better performance to a lower price to better features.
“The more competitive the market, the more important your competitive advantage is, and the more important it is to clearly identify and state it,” said Blake Stevens, a senior associate of venture capital firm Harris & Harris Group.
You also need to be willing to change it if the competition changes, Stevens said.
3. Keep it simple
Many entrepreneurs think they have to come up with a with a new technology that no one has ever thought of or apply it in a creative way. Donna Harris, co-founder of 1776, an incubator for startup businesses, recommends keeping it simple.
“Some of the best businesses are the ones that take the best of technology and apply them to a problem … that’s right in front of you,” says Harris. Use existing technology to develop a solution that fits your customer’s needs and incrementally improve upon that solution.
4. Form partnerships
Is your startup going to need software engineers? Will it need manufacturing? Do you need experts in the supply chain? If you answer yes to any of these questions, Blank recommends you find partners or third parties to outsource activities you can’t do yourself.
Finding partners is just like finding customers, he said. You need to find out which ones work with startups and state clearly “what’s in it for them to work with you,” he said.