By: Asher Epstein, Managing Director, Dingman Center for Entrepreneurship
The entrepreneurial process begins by identifying an unsolved need in the market. At the Dingman Center for Entrepreneurship we focus on answering five key questions to help determine whether an idea is a good one to pursue.
1) What problem are you trying to solve?
Is your problem an aspirin or a vitamin? An aspirin is an acute problem that needs a real solution (ex: pounding headache). A vitamin offers a nice to have solution but the pain isn’t as sharp. The pain caused by the problem being unsolved is the first step to identifying how many people and potential customers will value your solution.
2) How big is the problem?
Is the market large and identifiable enough to make a worthwhile solution? You may have only one customer but if the pain is very acute the solution may still be worth pursuing if the customer is large (ex: Department of Defense). The challenge with many smaller customers is to figure out how to reach them all cost effectively. In either case, you need to make sure you know exactly who is going to open up their checkbook or wallet and buy a product or service from you and make sure that your effort and investment will pay off.
3) Who are your competitors?
Evaluate solutions in the context of “like” and “kind” competition. “Like” competition is Miller Lite vs. Hook and Ladder Golden Ale (a Dingman Center company). “Kind” competition is a cold soda at a ball game on a hot day. The soda might not be as good as a beer but it will solve the problem of thirst. Your solution needs to beat both sets of alternatives to be valuable. The best way to assess an idea is to figure out how to get someone to pay for a pilot of the solution. If you are truly solving someone’s problem, people will appreciate that a partial solution is better than no solution. The challenge is to adjust the risks of the “half” solution against the benefits. Figure out how to limit the downside if the product fails to deliver. Entrepreneurship is about managing risk on an ongoing basis.
4) Is the right team in place?
Do you have the right skills and resources to solve the problem that you have identified? Do you need additional team members to help you? If you can’t convince other talented people to buy-in, it is probably a sign your idea is not strong. It is important to understand the daily role you will play in your business. For example, as a start-up technology CEO a lot of your time will be spent with customers and investors, not developing software. As a food retailer, you need to be open at the hours when people eat not just 9-5. When you pursue a venture it can become all consuming. If you don’t want to do the work it may be a good idea, but not a good fit for you. Ideas alone won’t make you successful – the hard work is implementation.
5) Is your idea worthwhile?
Worthiness can be defined in a variety of ways. A lifestyle idea allows you to spend time with your family and provides a stable, but limited income. A high-growth idea is a venture that focuses on providing high returns to investors. Both ideas are worthwhile as long as investments and expectations are clearly defined. Social ventures and double triple bottom lines (environment, social benefit, charities, etc.) are worthwhile as long as the proper metrics are utilized — a failed non-profit doesn’t do much for the world.
Asher Epstein is the Managing Director of the Dingman Center for Entrepreneurship. He is responsible for overseeing the center’s strategy and operations including business incubation, technology commercialization, global programs and startup funding services.