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Atlanta Ventures Presents:
Tools to Launch a New Business Idea

INTRODUCTION

Interested in starting a new business? Think you have an idea that you think could solve a pressing customer problem, but don’t know how to test that belief? Before you immediately go to launch a business, consider using our resources to evaluate the idea. We’ve found that entrepreneurs sometimes fall into the trap of pursuing an idea before they’ve done adequate customer discovery, a problem that can lead to significant wasted time and money!

Atlanta Ventures has worked to build key questions, templates, examples, resources, and keys to success for each of these major buckets in order to help you dig deeper into your potential business idea. If you can address the four main topics outlined above, you will have developed a good foundation for a potential business. Keep in mind how the one day, one week, and one month answers may differ. Start small and continuously evaluate whether any of your key learnings lead you to change paths. While these are all important questions and topics, not every one applies to every situation. Rather, they are meant to serve as a guide to help you think through some of the key considerations before you launch your business. In the end, the decision is yours!

The various topics and questions below are purposely categorized in the order in which we have found helpful to start evaluating your business idea. Following these steps can help you determine whether to pursue your idea or simply pivot to a different one:

1. DEFINE THE PROBLEM

Why do customers care? You may have an amazing idea, but if there isn’t a true market for the solution, your business will fail to get off the ground. You’ll need to understand where the market has been and where it’s going. Why is it growing and what external factors make it a hot space? How will the market evolve over time? Who else competes in this space? Can you expect significant adoption/share?

Questions

Problem Statement:

  • What is the problem that you are trying to solve?
  • What are the pain points that this problem creates? Why does it need to be solved?
  • How frequently does this problem happen? How do people address it today?
  • What are the individuals/businesses affected by this problem currently doing to “solve” it?
  • How are you as an entrepreneur uniquely positioned to solve this problem? Do you experience this problem yourself or work in a particularly relevant industry to this problem?

Resources

What Defines Success or Attractiveness?

You’ve identified a true customer problem which. . .

  • is mission critical to the customer
  • multiple customers mention without prompt
  • creates proven pain point in the customer’s everyday life

2. UNDERSTAND THE MARKET

You may have an amazing idea, but if there isn’t a true market for the solution, your business will fail to get off the ground. You’ll need to understand where the market has been and where it’s going. Why is it growing and what external factors make it a hot space? How will the market evolve over time? Who else competes in this space? Can you expect significant adoption/share?

Questions

Trends (past, present, and future):

  • At a high level, what do you know about the industry upon first analysis or research?
  • What did this industry’s market look like 5-10 years ago?
  • What does this industry’s market look like today? 
  • How big is the total addressable market this problem affects?
  • When thinking about the Total Addressable Market (TAM), what portion of that market will you start with? Is there a specific geography or customer segment that you have in mind? 
  • How large will that initial market be?
  • Where might you want to expand next? How big is the market then?
  • What will this industry’s market look like in 5-10 years?
  • Are there any external factors / triggers that will drive the product or market forward or make the timing right today? 

Competition:

  • Who is currently offering a service to solve this problem?
  • When you first begin your search for competitors, do the keywords related to your problem return specific companies or more general market / industry information? (e.g. does one competitor also own significant name recognition or ad space online)
  • How large are these competitors? Are they established or early stage? 
  • Has there been a lot of consolidation amongst competition recently or significant outside funding for any of them in the space?
  • Based on the size of the market and the competition, how hard will it be to gain share in the market? How fast do you think you may be able to gain share?
  • Are there any significant barriers to entry in the industry? Do we expect a lot of other people to take this idea and run with it?

What Defines Success or Attractiveness?

  • The market for your product is large, growing, and focuses on an untapped niche
  • There is an external factor or trend that supports the market’s growth (e.g. smartphones supporting new applications)
  • You feel confident in your ability to compete with competitors in the space or differentiate yourself from them

3. Determine your target customer

Once you understand the problem and the market, it’s important to fully grasp who your customer will be and the value proposition to them. Try to be as specific as possible with your target segment even if you think the solution could apply to a larger population. How big is the target segment? How does the pain point manifest itself to them? Why can you uniquely deliver value to them? What questions should you ask in customer discovery?

Questions

Customer Profile:

  • Who will pay money for a solution to this problem?
  • Is there a certain segment (size, age, industry, etc.) that your product will target?
  • Are you selling this product B2B or B2C? 
  • Is there a difference between who will buy the product and who will use the product?
  • Is there significant customer concentration and/or power? (e.g. could one customer, such as Wal-mart, control all the demand and set your price?)
  • How will the customer use your product in their workflow? 

Tools/Templates

  • Coming soon.

Resources

Segmentation

Customer Discovery

What Defines Success or Attractiveness?

  • You have validated the problem with multiple customers
  • You’ve identified ways to segment your customers and defined your target customer for acquisition (e.g. small retail businesses with <100 employees)
  • Customer discovery has led you to understand customer needs (e.g. ROI desired, products or services needed)
  • Customers have signed up to be development partners with only a baseline understanding of the product’s vision (no tangible product yet)

4. Outline the business model

Now that you know the problem, the market, and the customer, identify the solution you will you offer them, how it will be differentiated from others in the market, and who will join you in its development? How will your business make money and scale the unit economics? What do you need to believe for the business to succeed? What risks do you have to come to terms with?

Questions

Proposed Solution: 

  • What is the proposed solution to the problem or the product you have envisioned?
  • How would you describe this solution to a complete stranger or pitch it to an investor? (e.g. your “elevator pitch”)
  • Is this solution something that individuals must have or something that is “nice to have”?

Current Workflow:

  • Does the proposed solution provide an opportunity to play an integral role in the customer’s workflow?
  • If not, are you creating an entirely new workflow? What leads you to believe that the consumer would abandon the current workflow to adopt your solution?

Unique Value Proposition: 

  • How is your new approach better than the current workflow/competition?
  • How will you differentiate yourself from the current products and offerings?
  • Can you target a customer segment that is underpenetrated? Is there a feature that you see missing in the market? Can you sell through a new channel? Will your cost be lower than everyone else’s? Does your service model separate you from competitors?
  • How will customers determine the ROI from your solution?
  • Do customers inherently see the value in the solution you are offering or will you have to also pitch the value of your solution itself before you pitch yours over competitors?

Business Model: 

  • How will your business make money? Consider short-term and long-term. 
  • Take some time to do some back of the envelope calculations to test initial validity and feasibility of the idea:
  • Upon first look, when do you expect the company to break even? What are the assumptions that you are making?
  • What do you think the margins for the business could be?
  • If there are multiple revenue sources, is there one that will generate a more significant portion? 
  • Who is going to pay for the product and how will that be structured? (e.g. subscription, membership, one time fee)
  • How do you plan to reach customers? How will your product be distributed?
  • Are there any other decisions that need to be made before launching the company?
  • How do economics scale with growth?

Team:

  • Can you form a team that has the experience, knowledge, and determination to execute on this business idea?
  • How are you balancing skill sets on the team? Do you have a good mix of technical and business-minded team members? 
  • How will you divide up the equity of the business amongst key team members? How are the founders dividing their own shares?
  • Do you have a clear pipeline for talent where you plan to start your business?
  • How hard will it be to recruit and retain team members as you scale the concept? Can your leadership team ensure the culture remains intact?

“What You Have to Believe”:

  • What assumptions need to be true for this to succeed?
  • Which assumptions are you confident in? Which give you the most pause?
  • What is your backup plan if some of the assumptions turn out differently?

MVP: 

  • What have you learned from talking to customers that influences what your product will look like? What do customers need and how will you provide that to them?
  • Do you have customers identified who have agreed to be your development partners, helping test the initial iterations of the idea alongside you? 
  • If not, why are customers not willing to serve in this capacity?
  • Do you understand what the MVP look like? 

Risks / Concerns

  • What are some major risks you think you might face?
  • Do you have any general concerns with the problem, solution, or market?

Resources

Startup Strategy

Business Model / Plan

Financial Modeling

What Defines Success or Attractiveness?

  • The economics of your proposed business model work in a way that delivers value to both the customer and the company 
  • You’ve defined a clear value proposition for the customer
  • There is a clear path and economics to scale the business
  • You understand the key assumptions and sensitivities to watch out for as you launch the business
  • No significant red flags have arisen from your research

All our Tools

Condensed list of tools coming soon!