As an entrepreneur, I’m constantly pushed to grasp new concepts and approaches in order to evolve my business. Here’s an example. My leadership team and I have been talking about offering new services as well as discussing industry partnerships we want to form. I have strong ideas of what we could do in these areas but I’m hesitant. I’m hesitant because there are a number of untested assumptions.
Instead of burying my head in the sand, launching a new service and hoping for the best, I pushed myself to figure out how to gain more confidence about trying something new. In my quest for guidance on how to best validate my assumptions, I came across two very helpful people. Their messages gave me specific steps for realizing and testing my assumptions. I also learned something else: a model for testing the waters before making a career change. Let’s discuss both.
Lessons from a beef jerky start up
I started investigating the founder of a local company, called AppSumo. AppSumo.com has some really helpful website tools which we recently started using. Since they are local I dug a bit more and got some insight into the founder’s approach to new business ideas and “wantrepreneurs”. He has a funny, but very applicable, example of starting a beef jerky business in a matter of hours. He explains more in an interview with Tim Ferris about the process of flushing out and then validating business ideas.
I also started reading The Lean Startup by Eric Ries. I’m about 2/3 of the way through but it has already shifted my paradigm on launching new ideas. His approach focuses on product development but it is still universal advice: conduct the minimum viable tests to confirm your assumptions about your new idea.
Throughout my research, two groups came to mind who would benefit the most from this model: business owners and job seekers. So how can you apply these two lessons from Eric and Noah?
Business owners: what are your tests?
It’s critical to have a plan before starting any major business initiative or change. What if you want to offer a new service? What if you want to change your pricing or billing model? What if you want to start a business? All of these initiatives require a decent understanding of how people will react. Will it turn people off? Will it anger people? Will someone buy this service? At that price?
Think of the effort you are potentially putting into each of these initiatives: marketing, sales, support… it’s quite a lot. While the out-of-pocket costs may not seem bad, think about the time you are investing. I know you are anxious to get started but do your research and find out:
1) if your idea will achieve your goal
2) how you can make your idea even better
3) what obstacles you will run into
You do these things by validating your assumptions with the appropriate test. First, you need to create the tests that will answer those questions.
Tests for new services & partnerships
In the case of launching a new service line, we looked at search engine queries to see if people were looking for these services and if they were using different terms we hadn’t considered. We also interviewed some former clients – we identified different segments and came up with questions for each.
When it came to potential partnerships, we created a list of questions and surveyed potential partners about existing partnerships, existing/former partnerships, and their opinion of our proposal. Those steps validated many of our concerns and forced us to change our model. We were also quite surprised by the number of new ideas we heard for making our proposal better. For example, how our partnership could help find them new business. We also realized it would take a lot more work to build and maintain these relationships.
This testing forced us to put some of our plans on hold while we went back to the drawing board. Yes, it’s a bit disappointing but noting compared to the disappointment of wasting a few months on a model that was doomed from the beginning!
Job seekers: what are your assumptions?
This approach also works for people considering a career change. What if you want to change your career and become a mobile app developer, for example? What if you want to move into management? If you are considering a career change, ask yourself, will you like the new career? Can developing mobile apps replace your current income? Will you lose your previous position if you aren’t successful as a manager?
Typically companies are better than individuals at understanding the risks of new ventures and trying to mitigate those risks. People seeking new jobs should consider the assumptions behind their desire for something new. Let’s look at an example: you want to change your career and become a mobile app developer. Start writing down your concerns, questions and assumptions. Then devise the simplest tests you can to answer them and, possibly, refine what you really want.
- Will I like developing mobile apps?
Test this assumption by taking a programming class or trying your own project. Are you excited about working on it? Do you enjoy learning it? Are you picking it up quickly?
- Can I replace my income by developing full-time?
Test this assumption by looking at your local market for mobile app developers. Do you have the right skills? Will you have to move to where more jobs are? Is there an experience requirement? What does entry level pay? What prerequisites will you need?
- Do I want to work as a developer for a company?
Test this assumption by networking with developers at large and small companies. Also, talk to the managers of those developers and get their perspective. Will you have the structure you desire? The freedom? Use this research to guide you on what environment you will like the best.
Is research just for big companies?
As a small business owner, I sometimes felt that “traditional research methods” didn’t apply to me because they were so expensive that only big companies could. But Eric and Noah are dispelling that misconception and showing you how research doesn’t have to be something long, drawn out, outsourced or costly.
Conducting tests to confirm your assumptions is a very worthwhile exercise. Do it before you invest time and money in a new business or in a new career. Focus on simplicity and you’ll see how easy it is and how valuable. You’ll also see ways you can apply this philosophy to other aspects of your life.