Written by: Matt Wilhelmi
I was visiting a local Shark Tank event at Judson University a few weeks ago. It was great; there were 4 different teams competing for the grand prize of $5,000. Some of the teams had put a lot of time and effort into creating their presentation and their pitch. What I learned from the questions each “Shark” asked was that the most important thing to them was validation from the market. They asked questions like, “How do you know this product/service will be successful?” and, “Why do you anticipate this will make a lot of money?” It got me thinking: Real business owners should be asking the same questions! They need to “Fail Fast.” Here’s how:
The first step is to make a Small Investment of time and money. Don’t spend tens of thousands of dollars or hundreds of hours of time making a prototype. Invest just enough into your product or service to determine if it’s feasible and viable. Create a very basic concept or prototype.
After you’ve got your concept down or your basic prototype made, the next step is to get a Proof of Concept. This is a term used to describe the process of gaining validation from your target market or a focus group. You’re literally running it by a diverse group of people to gauge their response. Seeing if they would pay your asking price for the finished product (even if you’re just showing them a concept) is a great way to get a proof of concept.
Now that you have proven your concept, it’s time to Test the Market. This step is different from Proof of Concept because now you’re asking your target market to make a buying decision. (You still haven’t invested tons of resources.) When you test the market, you’ll get valuable feedback on other features to incorporate and find out what your target market really thinks of your product or service.
Related: 6 Steps to a Winning Marketing Strategy
When you’re testing the market, you should try to get pre-sales or other financial commitments to offset initial production runs, marketing expenses, or other start-up costs. The revenue or cash acquired from this process should cover any immediate financial needs and offset previous amounts invested.
A noteworthy point is that admitting failure is in and of itself actually a win. What I mean is that admitting your target market doesn’t see value in your product or service before you leveraged yourself with an immense investment of time or money, is a great learning opportunity.
Related: Help! I need financing: Wanna be a Partner?
Feedback is always valuable; it’s especially valuable when it’s directly from your target market. But finding out that your product or service doesn’t resonate with your target market (after you’ve invested countless hours or irreplaceable retirement funds) is a lot worse than Failing Fast.
We’d love to hear from you! What are some other ways to Fail Fast?
Have you ever had to admit that a product or concept wasn’t going to work? Were you happy you didn’t invest tons of time and money first?
If you have an idea that you’d like assistance developing a Proof of Concept for or Testing the Market with, please contact us!
