...is to convince 5 experienced professionals in the next 15 minutes that your idea is ready for an $8,000 investment and acceptance into the University of Guelph College for Business and Economics (CBASE) Hub incubator program. Last week, I had the opportunity to be part of the panel of industry professionals for entry into the CBASE program. This program focuses on helping startups develop a strong business model that can be rigorously tested and intelligently scaled. It was my first time being part of a judging panel for new businesses and I was very impressed with the diversity of ideas, as well as the different business models being proposed by these entrepreneurial companies. There were three key takeaways that I had from the day which I believe can help others as they come up with their pain killing solutions for the market.
Know your financials If you are a "for profit" business, the reason you have an idea that you would like to mature is you believe there is a way to make money. There is no more awkward moment when you are presenting your product idea than to be asked fundamental questions such as customer sales price, product cost and channel margin and not being able to easily answer. One of your main roles as the entrepreneur CEO of your concept is to know your financials. In the early stages, you do not need to know the exact costs down to the penny. What you do need to know is roughly how much your idea will cost you when you launch, how much you believe you can charge your customer for your solution and how much you believe the sales channel will require in order to want to sell for you. Without knowing how the different pieces of the value chain come together to get your idea out to the market, you really just have a neat idea, not a business.
Know your customerRegardless of whether you are selling a physical product, providing a platform for service, or creating a new patentable technology for an entirely new industry, it is absolutely essential that you have a very clear picture of your customer. What do they look like? How old are they? Are they technical? Should they be? Will this product be in a physical store or will it be sold online only? Are you selling to other businesses or to consumers? At the most base level, you need to know the in's and out's of how your product is going to solve your customer's pain. If you cannot clearly articulate why this customer is going to buy what you are selling, you really need to take a step back and think deeper about your really cool idea. Remember, to develop a solution that your customers care about, you must be solving a pain that your customers care about. To get it right, you need to know as much as possible as early as possible about your customers.
Know your competitionSo, you have a great idea, know roughly how much it will cost and approximately what you can charge. You have a pretty clear picture of what your customer looks like, what they like and also dislike. The other leg of this stool, at this stage, is to get a clear idea of both primary and secondary competitors in the marketplace. Who is selling a similar product in the market today? What other choices could your customers explore? How much are they charging customers? How much margin are they providing to the channel? Where are they marketing their product and how much do you think they are spending to keep the product moving in the channel? What are the strengths and weaknesses of the solutions that exist both in the primary and secondary competition? Spend time early to go to school on the competition that exists today. They have spent time and money on the market already, so you might as well take their investment to study and learn as much as possible for free.
At the end of the day, it is really easy to get caught up in the excitement of your concept without having a clear enough understanding of the landscape. Take a step back before you go super deep into developing your pain killing idea and ensure you understand the rough financials, your customer and the competitive landscape. From this solid foundation, you will feel a lot better about the future investment required to bring your idea to the market