September 17, 2010

How to Validate an Opportunity for Under $2,000

One of the biggest problems entrepreneurs face is figuring out whether their idea has legs before sinking a lot of time and capital into it. Nobody wants to have their name attached to a giant smoldering hole in the ground. Traditional forms of opportunity analysis are helpful (understanding the economics of the business model, researching the market size, growth rate, competition, etc.), but sometimes you need to actually build something you can demo or, even better, test on prospective customers.

Adeo Ressi at the Founder Institute has a great video describing a quick, ten-step process you can follow to cheaply triage whether your business model is a winner.

Adeo Ressi on Product Development 08/19/2010 from Adeo Ressi on Vimeo.

Ressi's very first suggestion is to secure your company's domain name(s) (including common misspellings and TLD variations) and e-mail. Be sure to check out my earlier post on how you can quickly set these up for your business using Google Apps and Sites for only $10!

Some of Ressi's advice is less relevant to brick and mortar businesses, and it is no substitute for an in-depth market validation effort. However, following his steps can help you weed out inferior ideas before committing your team to a more intensive validation process (as described, for example, by Rob Adams or Steve Blank).

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