January 20 2016

How to Start Your Startup (Part 2): Market Research

 

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Often, aspiring entrepreneurs underestimate the significance of this step. They get excited about their idea and either stay in the easy bliss of the idea phase and never truly take action on their idea, or they jump into building and marketing a product that they have not actually tested in the market.

 

Big mistake. Huge.

big-mistake

 

Here are a few thoughts from our expert one the matter, Santosh Sankar, Director of Strategic Initiatives at Lamp Post Group.

 

To begin, Santosh’s advice is to leverage The Lean Startup— read it, understand it, internalize it.

 

“The “startup” is a grand experiment to validate your idea and find an economically sensible, scalable business model. Out the door, to keep your ducks in a row, I highly suggest filling out a Lean Canvas to map out the major aspects of a startup business model. Some Googling can reveal great videos and discussions around it’s use.”

 

Once you’re informed on this framework of building your startup, the best course of action is to build your way to market.

 

What does this course of action look like? You can break it down into three steps:

 

  • Build.
  • Measure.
  • Learn.

 

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You build a prototype, get feedback and apply changes based on that feedback. This process allows you to make sure your product has legs before you go all-in.

 

When it comes to building your prototype, Santosh assures, “The prototype doesn’t have to be programmed and beautiful to behold. It simply requires an interface that allows users to understand the core features.” For prototyping web and mobile applications, Santosh recommends good ol’ pen and paper with some help from an app called Marvel.

 

*Note (For more on the prototyping process, particularly about prototyping hardware, check out the next blog post in our series, from our hardware prototyping expert.)

 

Once you have your prototype, it’s time to reach out to your target demographic and collect feedback. The best way of going about defining that demographic is through creating thoughtfully designed user personas. “For example,” says Santosh, “Let’s say I want to build an app to capitalize on the trend of people shopping for clothes locally. I would make some high level assumption around the middle class population, dig-in and segment the types of people who might use the service (college students, young professionals, et al). I need to then paint a picture of who they are — this is your persona. To develop them, think about who they are: gender, age, socioeconomic status, budget, occupation, hobbies, likes/dislikes, et al. ”

 

From there, you need to go out and engage with these potential customers where they hang out– get in their element.  It is during these engagements that you will build empathy for your potential customers by learning about and understanding their problems and goals, and therefore you can use that information to adjust your product.

 

As for how to approach these customer interactions: find willing participants (don’t kidnap anyone), take them out for a cup of coffee and ask them to try out the prototype. The key to getting the most out of these interactions is encouraging the user to think aloud. Ask them to verbalize their pauses and questions-  thus giving you valuable insights into problems and possible solutions in terms of user experience. Remember, though, be careful not to lead them to answers! Let them get to a conclusion or outcome on their own.

 

Once you’ve conducted 3 to 5 of these interviews, you should have a more educated view on where your idea and prototype stand. More likely than not, changes need to be made to address problems and areas of opportunity. Now is the time to make those changes. There is the possibility that you need to adjust course and “pivot” to address a different problem or solve the problem in a different manner — that’s ok! It’s better to know that now than to waste time and money into something that isn’t valuable to potential customers.

 

If you are continuing with your idea, though, it’s time to go through the entire process again. Yep. Iterate. Over and over and over, until you get it right. Santosh notes, “Iterating can be tedious, but stick with it.” Unlike large, bulky corporations, your small startup has the flexibility to make changes quickly and identify problems before they run rampant. The ability to iterate is what sets you apart.

 

When all’s said and done, market research comes down to real-world interactions and iterating based on those interactions — this is far more productive and informative.When it comes to casting numbers for discussion, it’s about “making intellectually honest assumptions and being able to defend them.” Those who conduct market research as a sort of numbers game are missing the point. “Anyone can make a market opportunity number work for them.”

 

Thanks, Santosh, for all of your insights! If you have questions for Santosh, you can tweet him @santoshsankar.  Check out our next post in the “How to Start Your Startup” Series: Hardware Prototyping.

 

This post was written by Katlyn Whittenburg, the Social Media Manager at Lamp Post Group, with the help of Santosh Sankar. Stay up to date on what we are doing! Follow us on:

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