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.
On executing the first steps of a successful business:
Recognize what you are good at
You need to work on your business not in your business. Following this advice was one of the most important things Matros ever did. “I realized I was not good at running a restaurant. I needed to bring people in who had experience in food service,” Matros said. Matros also recognized that he is more of a visionary than a true CEO. This realization caused him to shift his focus from being a leader to being a connecter, working to put together pieces of the puzzle.
Don’t reinvent the wheel
There are millions of people on the Internet trying different market strategies that you can learn from instead of wasting time trying to reinvent the wheel. “Trial and error is the absolute last thing you should do. You can find someone else to solve your problem,” Spartz said. He was able to quickly grow his business because he actively found people who had already tested and proven success instead of sitting there and trying to solve a problem himself.
Get your audience to work for you
Spartz media has created a powerful, scalable platform for curated crowd-sourced content. “We can spend most of our time creating new sites because all of our content is crowd sourced. The audience submits all the content for our sites,” said Spartz. Building this ecosystem that generates and automates the content for him has turned Spartz Media’s business model into one that is similar to a venture accelerator: they launch new sites every one to two months.