Many entrepreneurs have a failed business before it even starts. This sucks because it's only after investing years of pain, sweat, time, and money that they realize they need to call it quits.
Some refuse to face this reality and pummel on, to the detriment of everything else in their life. They hope and pray their business will turn around far past its expiration date to the point where other areas of their life have suffered too.
It doesn't have to be this way.
We can determine earlier on when it's time to pull the plug on our business, whether it's still at the idea stage or well-into the early-startup phase. The answer lies in a basic DVF model.
I grew up observing many people launch businesses with excitement and determination, only to see them crumble years later. In addition to time spent that the entrepreneur couldn't reclaim, it was never lost on me how a little piece of their soul died with their business too.
It's heartbreaking to witness.
This problem exists because entrepreneurs are basically dreamers and would-be idealists. It's a noble quality but also a brutally unforgiving one. We're raised to dream big, pursue our passion with everything we got, and it will only take perseverance and a willingness to wait it out before success eventually comes knocking.
Most entrepreneurs resist pulling the plug because we see it as failure- to ourselves, to the naysayers who doubted us and mocked us when we said they were going to launch "Bright Idea X". And we can't bear to disappoint the people who supported us and have worked with us when paychecks weren't always guaranteed.
People don't usually willingly choose to kill something close to them.
The danger of our inability to see that our business venture will go nowhere is that it hurts us more, in the long run, to keep going. I have family members that had a bright idea, launched a business, and five years later have barely made a dent in their bottom line.
Passion is one thing, but it's often hyper-glamourized as the be-all and end-all to succeed. Passion gets you through 18-hour days, logistical delays, countless No's to your face, but it doesn't create demand for your product or service.
The market does.
Our passion is the fuel to providing a solution to a problem that already exists. Most people will stumble a few times while they refine their solution before they land on a winning idea.
According to an award-winning article in Inc. magazine, "successful entrepreneurs achieve hero status in our culture" as we "idolize the Mark Zuckerbergs and Elon Musks" but the psychological price of entrepreneurship includes "near-debilitating anxiety and despair".
The higher we aim to climb, the bigger the potential to fall, and the more damaging the effects of such a fall.
Of course, there is no guarantee in business but we can run simple tests to reduce the risk of failure and cushion the drop.
Do you have a winning business idea or is it a pipe-dream?
A winning business idea meets all the criteria of the desirability, viability, and feasibility Venn diagram.
Desirability
IDEO U, an online global design school, introduced a prototyping concept for designing new businesses. Joe Gerber, IDEO CoLab Managing Director, believes in questioning and testing as you prototype your idea.
Ask yourself "what assumptions have to be true for this business to work?"
Do people want what I have to offer? Go a little deeper: do enough people want it? You can't create desirability- it already exists. Your product or service just provides what people already want.
Or in other words, what problem are you solving?
Some of the biggest companies are solving problems in their messaging, not even in the product itself. Your desirability factor doesn't have to meet a basic, human survival need.
No one needs a Coca-Cola to survive (your waistline and blood glucose would actually thank you if you avoided it) but people are drawn to the togetherness brand that Coca-Cola communicates. People need community and inclusion.
Instagram influencers aren't solving major life issues when they post pictures with a designer bag or on a yacht off the coast of the Maldives. But their followers want escapism. They enjoy living vicariously through someone who has what they want or is doing what they will never be able to do.
Most creators aren't really reinventing the wheel in a big way which is fine. The key is to be specific that somehow your 'thing' will meet someone's desires.
My sister recently started a bakery that makes scones, cupcakes, and custom cakes. She uses a secret third or fourth-generation family recipe for the scones with premium ingredients and only bakes on request. She spends an entire day painting Olaf's features on a custom Frozen cake for a customer.
She puts a lot of care and attention to detail into her work. Her customers know that placing an order with her isn't the same as picking up a cake from the bakery at the mall and that's why they order her cakes. Her customers want to feel love even in the birthday cake they order for their kid.
Her slogan "with love in every crumb" isn't just a marketing gimmick. It's the essence of her business and her customers know that. By sharing love in her scones and cakes, she connects with people's desire to receive love too, even if it's in their food.
If you can capture peoples' desires, you're one-third of the way there.
Viability
Is it sustainable? Too costly? Can you maintain running the business?
I love berries. They're a huge part of my diet. In my landlocked, semi-arid country, we have to import them.
Nothing would make me happier than to have a few hectares of blueberries but in this climate, that would be impossible. They sell at the supermarkets like hotcakes at premium pricing because everyone else loves them too and none of us can grow them locally.
Despite the demand for the product, berry farms are not viable here.
Other key factors to consider when determining if your idea is viable are:
- Timing
Timing isn't something we always have in control or when we do, we simply miss the mark. Travel companies that launched in late 2019 would be some of the unluckiest victims of the pandemic.
A company like Beyond Meat hit retail shelves in 2013, only 8 years ago, and can boast a near $8billion valuation due to the opportune timing of when they entered the market. Veganism and plant-based lifestyles weren't mainstream 25 years ago but they definitely are now.
- Economic mood
Your bright idea should fit with people's current spending habits. If it doesn't, spin it.
Back to the travel company example — no one was traveling for leisure in 2020.
But we all wanted to.
Turning a doomed idea into a surprising success is possible with a little clever re-engineering.
Everybody was up in arms when Kim Kardashian flew to a private island for her 40th birthday last year. She and her crew had all been tested for COVID, they flew privately, and they quarantined before their trip to ensure they weren't endangering anyone.
So what was the big deal then?
People were jealous.
They couldn't do the same and screamed on Twitter how tone-deaf it was given the plight of the world amidst a pandemic.
Perhaps it was. But really, wouldn't we all have done the same if we were able to?
Again, we all wanted to.
If your bright idea doesn't fit with people's spending habits, it isn't viable because it's not aligned with the economic mood.
By making it indirectly viable, you can use the economic mood to your advantage in another way.
The resort they stayed at and her brand SKIMS enjoyed the global press, as did Kim K with her birthday post from the island getting a whopping 7 million likes on Instagram. That's no small feat, even for the Instagram queen herself.
Controversy sells.
If your bright idea has great demand but isn't viable, then lay it aside. Alternatively, spin it into an indirectly viable one.
Unless you have other resources to move the viability needle to doable, you're going to face a rough uphill battle.
Starting a business is hard enough as is. Don't make it more stressful than it needs to be.
Feasibility
Does it work? If it's a physical product, it obviously needs to work properly or be ready.
If your idea is still an idea, then what plans do you have in running it?
Is it functionally possible given your available resources? Will you be able to execute?
What's great about the feasibility test is that it questions your plans, systems, and processes. Most entrepreneurs are excellent dreamers but fall flat on execution.
Feasibility corrects that.
My production company is at the very early stage so it's impractical for me to commission a $100million blockbuster movie right now because we don't yet have the means for an operation at that scale. In the meantime, we're cruising with low-budget indie projects with the resources we have on hand.
You may have the best screenplay in town but if it requires an 80-man crew and you can only recruit 5, it's not going to work. So either adapt or pivot.
Feasibility can get confused with viability.
Viability speaks more to how you'll make money and whether your profits will be enough to sustain you and reinvest back into the business to scale it. Feasibility speaks to the manageability of your operations.
Anything out of that realm is a pipe dream.
Once you've determined your bright idea meets in the middle of the Venn diagram, you're good to go to the next step: prototype the idea. Prototyping involves asking the right questions, making assumptions, prioritizing them, then testing the assumptions.
At this point, you're well on your way to a fruitful enterprise.
In conclusion
We've all had that moment where our eyes glazed over as our minds started brewing over a bright, new idea. Excitement brews in my gut as we envision our idea taking off.
Finally, we conjure up enough courage to finally do something and hope that our idea won't flop.
Pipe-dreams can come true. We all love a good underdog story. But launching a business is hard. You can make the uphill climb a little less steep.
A dream is a great starting point but not enough. Short of a magic wand to change our fate or a crystal ball to predict the future, we can mitigate the probability and risk of our wonderful idea.
In our excitement to run with our bright idea, it's helpful to map out our dream with the simple D.V.F solution before we start hiring staff and leasing office space.
Don't overthink it and get youtself into a frenzy wondering if your idea has legs.
Just Venn-diagram it.