How do you know when you have hit on an idea that is worth pursuing? Entrepreneurs Unpluggd invited three successful entrepreneurs to share their tips for recognizing the potential of an idea, analyzing the current market and executing the first steps of a successful business. Today we break down their advice for you, step by step:
On recognizing the potential of an idea:
Use data to make decisions
Understanding how to evaluate data has helped Emerson Spartz, founder and CEO of Spartz Media, to have a 90 percent success rate when launching sites. Spartz uses data to gauge the potential of an idea. He has a giant list of data-driven companies that he watches, looking for the specific changes they make that lead to online success. “I look at data-driven sites and track and measure every variable. I then see if I can reverse engineer what they did,” Spartz said. There is so much data online – you simply need to watch what others are doing.
Take your business plan seriously
A business plan is an important tool for structuring your idea and getting your business off the ground. “The purpose of a business plan is to vet your ideas and give yourself a roadmap to follow while getting your business off the ground,” said Matt Matros, owner and creator of Protein Bar. Drafting a business plan will help you recognize the strength of your idea and gauge the level of your passion. “When you wake up in the morning and it’s all you think about—that's when you know you have a good business idea,” Matros said. He stresses that having a healthy business idea is more important than having financial backing.
On analyzing the current market:
Build where you already know there is a market
Tapping into an established market will help place your business on the road to success. Jill Salzman, founder and CEO of Founding Moms, says that in addition to knowing a market exists, she must be familiar with it. She started her first venture, a music management company called Paperwork Media, after working in the A&R department of Elektra Records. Spartz agrees: he says he hasn't built anything seriously innovative in the mobile space because there is not a good way to become familiar with the market and track data.
Incorporate customer feedback
Listening to your customers is another vital step when trying to grow your business. Salzman treats the Founding Moms as an open source organization: just like each city they occupy, each chapter has a unique culture. Incorporating customer feedback also helped improve Protein Bar’s business. Matros realized that because customers wanted food he needed to add it to the menu. Listening to customer feedback will help guide you to create a product that people want to buy.
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