Many first-time entrepreneurs think their first steps should be to build a product or service and raise money to turn it into a successful business. But most experienced entrepreneurs and experts of entrepreneurial practices believe this thinking is wrong.
Many first-time entrepreneurs think their first steps should be to build a product or service and raise money to turn it into a successful business. But most experienced entrepreneurs and experts of entrepreneurial practices believe this thinking is wrong. They say the first thing an entrepreneur should do is validate that his or her idea solves a real existing problem in the marketplace.
“Very few ideas ever survive the first contact with a customer,” said Bill Mayer, vice president of entrepreneur services at Ann Arbor Spark. This is because entrepreneurs are often engineers, tinkerers or inventors who come up with ideas for things that they think everyone will love and buy. They don’t take the time to prove their concepts will address the needs of those who are not getting the job done. Consequently, most ideas fail.
Before they start building their products or services, entrepreneurs should talk to dozens of people they think will buy them, Mayer and other experts suggest. Through these conversations, they can find out with certainty if their idea will solve real problems; if by tweaking it in some way, they will solve existing problems; or if they need to discard their initial concepts and replace them with new ones.
Beyond validating the idea, Mayer offers three other tips to the entrepreneur hoping to turn a concept into a growing, successful business. They are based on his own experiences starting businesses and on working with many entrepreneurs at Ann Arbor Spark, a nonprofit business incubator. His other tips follow:
Build a team
Every experienced entrepreneur knows one thing for certain: No entrepreneur can start a business alone. He/she will need a team of people who can provide advice, answer questions and give referrals.
“So investing in a solid people network is among the most important steps an entrepreneur just starting out must take,” Mayer said. Unfortunately, inexperienced entrepreneurs often overlook the importance of building this network.
Work with an incubator
The physical space provided entrepreneurs by incubators, like Ann Arbor Spark and TechTown Detroit, is not just a place to work. More importantly, it puts entrepreneurs together in a community of like-minded people who share resources and best practices and who motivate each other.
This community includes entrepreneurs, of course, but also investors, mentors and other skilled people who can help those trying to grow their businesses.
In addition, the incubator can provide investment funding, business development assistance and marketing ideas. Furthermore, it can offer the high-speed bandwidth (along with security, encryption and advanced services) most startups need but can’t afford in the early stages of their development.
Entrepreneurs are more likely to succeed if they take advantage of the latest technology, which typically requires high-speed bandwidth.
Startups need high-speed bandwidth to easily move their huge digital coding onto hosted servers or local development servers. They need it to access the cloud where they can rely on Web service companies that run virtual machines with the software they are building. And they need it to leverage video conferencing and other technology-intensive means to engage and train staff at remote locations and to help sales reps communicate with potential customers.
Many entrepreneurs depend on the bandwidth offered by an incubator.
Ann Arbor Spark has recently upgraded its network from cable to fiber, giving it a stable, secure, extremely fast network. This high-speed bandwidth strengthens Ann Arbor Spark’s position as a world-class incubator and boosts the ability of the many entrepreneurs there who want to leverage the latest technology to build their businesses.
Beyond this high-speed network, Ann Arbor Spark also recently adopted fiber-based Ethernet technology to connect its three locations. This efficient, scalable platform enables its own employees to be on the same secured network to share resources and access the company’s file and exchange servers. It co-exists alongside the high-speed bandwidth network used by the entrepreneurs but is totally separate from it and secure.
Although Ethernet may be beyond the needs of early-stage startups, Mayer said that as they grow and open remote locations, they, too, should consider such a network.
These four tips can start entrepreneurs on the right path to turning their ideas into successful, profitable businesses.
This article originally appeared on Crain’s Detroit Business.