Dear Aunty B,
I have a great idea for a new business and have done my market research and everyone loves the idea… except my mum!
She says I haven’t got enough industry experience as the idea is for an industry I’m not familiar with.
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Is she just scared that her baby is going to do his dough, which is what my girlfriend thinks. It needs $50,000 to start and I will be using all of my own funds.
Scared or smart,
Dear Scared or smart,
I haven’t seen the plan, so I don’t know how feasible it is. But I can point out the traps of people who dive into an unfamiliar industry. The problem is you don’t ask the right questions because you don’t know the questions to ask.
Think of it this way: all entrepreneurs want people to love their businesses. This is what makes them so good at selling (although it doesn’t make them good salespeople because they are so happy to blabber on about their products they forget to close the deal.)
So when you ask people what they think of their idea, they have fallen in love with you, your passion, and excitement and so of course they agree that the idea sounds great coming from you.
If that is your market research, you are in trouble.
What you need to do is find someone in your industry who has been successful and ask them for the top 20 questions they would ask if they were in your position.
One lesson I learnt early on is that when you do your market research you can make assumptions and then find out the marketplace works a completely different way.
For example, you might find that channels to market that you assume are going to distribute your goods are sown up by pre-existing agreements with the duopolies that control most industries in the Australian marketplace. Or that your customers buy at a particular time of year when you assumed they would buy throughout the year and just that one fact has major ramifications for your cash flow.
You need to find out what you don’t know, not have confirmation for what you do. That is the clue to a successful start-up.
Your Aunty B