Startable - Healy Jones’ & Prasad Thammineni’s Blog

One thing you must do before starting a new business is to talk to potential customers. Make sure you can answer the question, “who is going to buy/use this?” Figure out as much about your potential customer base early in your startup idea generation and then apply that knowledge against what you are trying to accomplish. Sitting down with and listening to potential customers before beginning your startup can help you justify all the effort you are about to expend, can help you focus your development on the exact solution that the market needs and can help you understand how to create a the right product positioning.

For some reason some consumer focused startup CEOs like to tell venture capitalists, “even my Mom/Dad will use it!” Of course your relatives will use your product; they’re your parents! Your Mom is not a focus group. Use online surveys. Find expert or passionate bloggers in the space that you are targeting and speak with them. (Yes, these people will likely talk to you, and if you’re eventually going to talk to venture capitalists about funding your business, you’d better get to them first, because VC’s will make those calls while they are evaluating your opportunity…) Talk to sales people targeting similar users. If you’re selling to big corporations, have you reached the people who will be buying your solution?

Paul Graham, the well known Y Combinator member/successful technology company founder, mentions the need to make something that customers want numerous times in his post The 18 Mistakes that Kill Startups. Paul states: “In a sense there’s just one mistake that kills startups: not making something users want. … Nearly all failure funnels through that.”

Jay Habegger, CEO of one of Atlas’ portfolio companies, OwnerIQ, puts it pretty succinctly on the Common Angels’ blog ¹:

The most important thing about any media business is the audience. Lots of media company business plans are based on a neat idea, but the entrepreneurs haven’t thought enough about their audiences.

You should also think about HOW you will get to your customers, which probably merits its own post at some point. The difficulty you experience trying to reach your potential customers while researching your business idea will likely give you an idea of how easy or hard it will be to sell to them once you have product ready to go to market. Find out from the customer how they would like to purchase your solution. If you need to go through distributors or be bundled into another solution provider’s offering, then you may need to account for some additional time to market and additional sales expenses.

This is the first in a series on topics to think about as you are starting a business. We anticipate adding further posts on how to approach other business firsts, such as how to build your team or begin a marketing program. This particular topic is not intended to be the single most important think to take into consideration before starting a company, and we’ve got plenty of others that we want to talk about as well! Hopefully you (and we) will find the different opinions of a young venture capitalist and a young entrepreneur stimulating.