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Early determination of potential for success (or failure) 3-2 Bus 310: Entrepreneurship J. Bradley Barbeau CSU Monterey Bay School of Business

Validation tests your business model at an early stage

3-4 Product/Service Industry/Market Organization Economic/Financial Let’s look at these in more depth…

Getting out of the building 5

3-6 Product/Service Evaluations Do Customers Want It? Will Customers Pay Real Money For It?

3-7 Product/Service Feasibility Do Customers Want It? Will Customers Pay Real Money For It? Will Enough Customers Pay Real Money For It?

15- 8 Does it make sense? Is it reasonable? Is it something consumers will get excited about? Does it take advantage of an environmental trend, solve a problem, or take advantage of a gap in the marketplace? Is this a good time to introduce the product or service to the market? Are there any fatal flaws in the product or service’s basic design or concept? First, ask the following questions to determine the basic appeal of the product or service.

 Product/Service Demand ◦ Their are two steps to assessing product/service demand. ◦ Step 1: Administer a Buying Intentions Survey ◦ Step 2: Conduct library, Internet, and Gumshoe research 3-9

 Buying Intentions Survey ◦ Is an instrument that is used to gauge customer interest in a product or service. ◦ It consists of a concept statement or a similar description of a product or survey with a short survey attached to gauge customer interest. ◦ Internet sites like SurveyMonkey make administering a buying intentions survey easy and affordable

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 Library, Internet, and Gumshoe Research ◦ The second way to assess the demand for a product or service is by conducting library, Internet, and gumshoe research. ◦ Reference librarians can often point you towards resources to help you investigate a business idea, such as industry-specific trade journal and industry reports. ◦ Internet searches can often yield important information about the potentially viability of a product or service idea

3- 13 One of the most effective things an entrepreneur can do to conduct a thorough product/service feasibility analysis is to hit the streets and talk to potential customers. This potential entrepreneur is administering a survey about a new product idea.

1. Create a description of your Minimum Viable Product (MVP) 2. Design an interview protocol (survey) to assess your MVP 14 Your team is to complete interviews with at least 10 potential customers This will be input to the second paper on validating your basic business model

 The Minimum Viable Product is that version of a new product which allows a team to collect the maximum amount of validated learning about customers with the least effort. ◦ It may lack features that are important later ◦ But has to have enough “meat on its bones” to allow for good testing ◦ Drawings and prototypes help 15

 Your MVP should directly reflect your value proposition  If it doesn’t, one or the other need to be revised! 16

 This is the set of questions you will ask and the procedure for asking those questions  You’re looking for useful feedback, not statistical accuracy  Job #1: Find out who your customer is  Job #2: Find out if they’ll pay for your product/service (MVP)  Job #3: Identify what is essential and what is “good to have” 17