Three tips to avoid the most common reason for failure.

So you came up with what you think is a great idea. You are convinced that there is a problem and you have a solution that customers will love. Now all you have to do is collect some money to make it reality. Sounds familiar?

In the past 17 years I have worked with hundreds of prospective entrepreneurs on Babson College and all over the country in my role as a professor and consultant for the Butler launchpad and in my own private work. This is probably the most common scenario that I met on. Entrepreneurs often avoid the most important question. It is not the way you start the business, but should Do you found the business?

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Note from the publisher: This article first appeared in Entrepreneur Magazine.

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Surprisingly, they are not alone. Investigations such as those of CB Insights, Tom Eisenmann and Kirol Kotashev, have found that one of the most common reasons for new venture lack is that a market is missing. In other words, the entrepreneur has created a product or service that did not have enough customers who were willing to pay for it.

Fortunately, this error is largely avoidable with a little front-end market research. Here are three tips to understand whether your venture idea is worth pursuing.

Do you know who your customer is (and who it is not)

The first step is to find out who makes the market for your specific business. Your customers are whoever gave them money, and they need to know who they are so that they can find out whether there is enough of them to make their time, energy and money worth. Why would you be interested in your product or service?

A question that is often overlooked is whether you feel like you have the problem that the product or service solves. This may sound obviously, but they would be surprised at how many entrepreneurs collect a lot of information from people who will never be customers.

Next, make sure you see it as a problem that is worth solving. I remember that I tried to sell diesel engines to a Russian truck manufacturer in the 1990s. We explained that we could save them fuel and help them to reduce emissions. The answer was that diesel fuel was cheap and it was nice that we took care of the environment, but they didn't. They would never be a customer – they did not perceive one of these problems as a problem for which it is worth spending money.

It is not sufficient to find who the potential customers are. You also need to know what distinguishes them from non-customers to really know how big your market is. There will always be people or companies who have the problem but are not ready to pay to solve it.

In other words, what does she do to buy a solution? The answer is rarely demographic – almost nobody says: “I would pay to solve this problem because I am 28 years old.” Imagine you define your market as 18 to 40 year olds. That means that someone says: “Wow, I love the idea of ​​a solution for it, and if I didn't just have become 41, I would have paid for it.” Demographic data is almost never what makes someone a customer.

Know what they are ready to pay for

Next, you would like to make sure you understand what you are willing to pay for. In other words, what does your solution have to make available to you to make you ready to separate yourself from your money? You do not want to waste time and money for functions that are not needed or that your customers do not get to buy.

One thing is to be understood how to solve the problem today. If you have not found a way to solve it, there is a good chance that you will not be interested in a solution, regardless of what you could tell you.

What do you like and like next about your current solution? Why are these things important to you? This helps you to understand which functions and advantages are valued and desired so that you concentrate on creating a solution that really meets your needs.

After all, you have to understand which aspects of a solution are the key to making a purchase decision. What would you tempt you to buy one solution via another? Why do you use your current solution to alternatives? If you know this, you can make sure that your efforts concentrate on the aspects of the solution that will rather lead to a purchase. In addition, it also helps you create a marketing message that is resonance at your customers because you know what is important for you.

Always ask “why”

Both in my work with entrepreneurs and in my previous career, I learned that the most important question about understanding potential customers and their needs “Why?” Reads: “Why?

If a person is ready to pay to solve a problem, and another does not, the answer to this question gives an insight into what makes these two people or companies different and the key to defining their potential customers.

You want to understand Why Certain features or advantages are as important as Why A solution is important for this specific customer. Customers often want everything. If you understand why, you will understand what you actually need.

After all, people often try to say what they believe that they want to hear. However, to make a decision about whether you want to watch an idea, you need the truth, not just something you feel good. It is much more difficult to explain “why” if the first answer is not really what you believe.

For some entrepreneurs it can be uncomfortable to approach strangers and collect information, but it is the best way to understand whether their idea is worth pursuing or not. While a number of factors that can influence the new company success may be outside of your control, you can make sure that you can do this work in advance to avoid one of the most common.

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Bradley George is an extraordinary professor of entrepreneurship at Babson College and faculty consultant for John E. and Alice L. Butler Launch Pad at Babson, an ecosystem that helps to put ideas into reality.

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