Once you have identified your assumptions, develop a plan to test and validate each of them. Build a scale model or prototype and invite potential customers to try it.
Gather their feedback on the usefulness of the product and what they perceive its value to be.
Find out who your economic buyers are. These are the people that will actually spend money to buy what you’re selling.
There’s a big difference between users who will try something for free and buyers actually willing to pay for the privilege.
Talk to the economic buyers and get a feel for their pricing expectations and limits. The discovery process is not just about identifying product features that customers want.
It’s also about identifying who the real customers are and how to capture them, the value proposition, the best way to market the product and where the growth opportunities are.
Use the feedback and information gathered to assess whether the leap of faith assumptions you have made are still valid. Most times they won’t be.
By knowing which assumptions are incorrect, you can adjust your expectations and strategy before your funding runs out.
It could take several iterations of the test and validation process before you can confidently proceed further.
But when you do, you’ll be surer of the outcome and can enjoy a better return on investment as a result.
The information you gather from this discovery based process will be essential if you want to develop a successful, scalable and profitable business model.
Be warned though, the process may also tell you that you don’t have a viable business model. Prepare yourself for this potential outcome and consider it a blessing in disguise.
It’s better to fail fast, adjust and adapt, than to exhaust all your resources proceeding down a fruitless development path.
Marc Peskett is a director of MPR Group a Melbourne based business that provides finance lending, grants advisory and capital raising services as well as business advisory, tax, outsourced accounting, and wealth management to fast growing small to medium enterprises. MPR Group is a member of the Proactive Accountants Network.
You can follow Marc on Twitter @mpeskett
