One of the secrets to entrepreneurial success is not just a great idea…You need a winning idea.And in Secrets to a Successful Start-up, I outline a technique for creating winning ideas again and again.How, though, do you place a value on a winning idea when there’s no evidence to support that value at the beginning — no matter how great you think the idea is?I know you’re probably convinced that you’ll turn it into a billion dollars one day, but to an investor’s ears that sounds more like a whole lot of hope.And, as much as she wants to invest money in your idea, how can she without first knowing that there are sales or customers lined up waiting?Or knowing that the idea is workable in the real world?Here’s what I’ve found works really well…Provide evidence: Take the idea forward by running a proof of concept. This means starting smaller and investing your own money, heart, and effort in a model or scaled-back version of the concept.If you can show that customers respond to the idea on a small scale, then investors are better able to see how the business will respond to an injection of capital, and you’re more likely to get the capital you need.Proof of concept works. I know because I’ve used it.I had a great idea for a business that utilized a unique infrastructure. I believed it would produce higher gross margins than a traditional infrastructure would.The problem?It was so unique that, while potential investors praised the idea, they struggled to move from interest to belief.That’s the challenge with winning ideas… they’re unique.And because potential investors and customers have never thought of it, they have no experience of its potential impact.I needed proof that the idea was solid, so I acquired a product that was smaller than the ones I was targeting and built the business model around it. (It cost me a few thousand dollars, but was well worth the price as I used it to get all the kinks out of the system.)Fast forward 6 months later…I was able to show potential investors the results in numbers and customer feedback that my proof of concept had generated. Although we were now looking at numbers in the thousands, whereas we had been speaking about a multi-million dollar investment, they could grasp the concept better.You need something to convince your investors of your idea’s soundness in the real world and a proof of concept works best.What if you don’t have the financial resources to do a proof of concept?If you’re struggling for cash and find it too difficult to do, at least come to the table with stakeholder feedback.Here are 3 possible ways to get that:
- Perhaps there are distributors you can visit to showcase your idea. Their opinions might sway an investor more than yours.
- There could be a trade show where you can hire an exhibition booth and conduct a potential customer survey.
- You can put information on-line and offer incentives to anyone who completes a simple survey.
The point here is to show investors that enthusiastic customers exist. Otherwise it can be hard to get the capital you need at the start.Cheers,Trevor