Validating your business idea so you can grow
You’ve got an existing business and you want to make it fly. But you really need to validate your idea before you can scale up.
I’ve been involved in a number of rapid growth and new business start-ups including Xero and more recently an online system for managing foreign exchange and interest rate risk called Hedgebook. I’ve learnt a huge amount through the process. Here’s the top five things I recommend you do if your aim is to hit the accelerator.
- Dragons’ Den it: Get 30 minutes with the most wildly successful entrepreneur you know. Tell them about what your plan for growth is and get their feedback. It’s likely they will rip it apart and this will help you know whether to pursue or not.
- Know your customers: Speak to your existing customers about your aspirations. Remember ideas are cheap and execution is expensive. Don’t be afraid to let people see what you are doing. You need the direct feedback from those who use your product.
- Know your markets: You need to understand your growth markets, especially if these are off-shore. Visit them. Nothing beats being in-market, meeting with the people who could help with your business and getting their understanding. Hedgebook has been looking to expand beyond New Zealand and recently invested in a four day trip to Australia where we attended 23 meetings! This was well worth it because the net result was a very clear first phase go-to-market plan.
- Get some funding: Getting someone else to help fund your idea is an excellent endorsement. It shows what you’re doing makes commercial sense. In almost every market there is a government funded inward investment organisation. You need to meet the people behind this, see what they think about what you have to offer and find out what research they can do for you. Most of these organisations will have a fairly solid review and selection process. Going through this process will help make sure you have done everything you need to.
- Write a market research paper: Before Xero entered the UK market I spent six weeks doing research. Then I presented my findings and recommendations to the board as part of the approval process. This was an excellent exercise that validated our go-to-market plan and provided a time-frame (in this case six months) for reporting back.
We’d love to hear your experiences in scaling up a business and if you have any gems to share.