What Entrepreneurs need to Know

fm Entrepreneur Zine 17 Dec 14 enhanced by Peter/CXO Wiz4biz

This week I gave a final exam to 29 undergraduates in my “Foundations of Entrepreneurial Management” class at Babson College in Boston. But a final exam is not the true test of what they need to know. They need to learn how to think & act to find & capture opportunities to make the world a better place. This may sound overly rosy, but my Startups must make the world better in order to survive. To succeed at that, entrepreneurs must consider and do the following things:

1. Find Customers & their Need. A passionate founder is often so determined to realize their own vision, that s/he can lose sight of other perspectives. Before going too far with plans, an entrepreneur should think about how a potential customer would view the new product. Which talented people could the vision inspire? Which partners would want to work with the venture? Which investors would want to bet on it? In a recent interview, Nutanix CEO tells me that “empathy” is the one word he invokes in almost all interactions with customers, employees & partners of his San Jose-based company that combines the functions of servers, storage & networking. “By empathizing with our employees, customers & partners, we believe we can build a company that will create value for our investors, because we solve their problems instead of dictating to them what we think they ought to have the way our competitors does,” he says.

2. Imagine & build a Prototype. Find an inexpensive way to build a model of your product. Let’s say an entrepreneur has the idea to build an App that will make it easier for college friends to arrange an evening out on the town. A prototype might be as simple as a series of drawings of the App’s screens. If the drawings are clear, save the time & money of hiring someone to write code until after the next step in the process. An example of this can be found in WiGo app. As the former student at Holy Cross College in Worcester, Mass., tells me, “I was on campus my freshman year and trying to make social plans — figure out who else was going out at night, where & what time.” But there were no easy way to do it, he says. “You could text other people or put a post on Facebook but you often wouldn’t get an answer.” So he came up with the idea for WiGo and mocked up some screen shots on paper for how the mobile app would work. He found a systems developer who built the app in the fall of 2013 for his new company.

3. Receive Feedback to “tailor” the product to your Customer. Next, imagine the characteristics of the individuals who might eventually buy the startup’s product. Based on that, find individuals who fit that description. Show them the prototype and ask whether they would buy it. If so, how much would they pay? If not, ask them to say what’s wrong with it or missing and what they would they change. Repeat this process until you see a “trend” of potential customers, that say they are eager to use the product and want to know how long it will be until it’s delivered.
WiGo is an example of a product that launched in January, got good feedback almost from the start, founder Ben Kaplan asserts, saying, “It became very popular within three weeks. Many of the people using it were friends on local sports teams.” Adds Kapan, “I started getting Emails & Facebook messages from people at other schools – where I had friends who wanted to use it.” If consumers say the product looks interesting, but it’s not good enough or solves the wrong problem, change the vision or find customers who need the product now — or give up.

[ 4. Build a Team of people, 5. Raise Capital to “expand” your business, 6. Anticipate & adapt to changes in the Marketplace & 7. What is your Exit Strategy? in Premium Content ]