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Entrepreneurs Make Assumptions-Some are Wrong!

You are assuming that you can build a profitable business by solving a compelling problem (or unmet need).  Let’s break that large assumption down into some sub-assumptions:

Market Segments: you are likely assuming that there are different groups of customers (“customer segments”) in your target market  What are they?  How larger is each customer segment?  Which one will you target first – and why do you believe that segment is the right one to target first?

Product market fit: You think you’ve identified a problem or an unmet need, and you assume that customers agree that the problem or unmet need is compelling – compelling enough that they will pay for a solution.   That implies that you assume customers are trying to avoid some kind of pain or receive some kind of gain.  Do you understand the pain customers want to avoid, or the gain they want to reach?  Do customers agree that our proposed solution delivers on the promise of avoiding that pain or leading to that gain?

Competitive Differentiation: you assume your proposed solution differentiated from alternatives in a way that customers find compelling?

Pricing, Cost, Financial Feasibility: you assume customers will a high enough price that you can make  money. Do you understand the costs involved in delivering the solution?  Can the business be profitable?

Marketing and Sales Channels: You might assume you can create awareness and develop leads and sell to customers.  But do customers think you’re right?

Partners: There are probably partnerships you assume you can build – for development, manufacturing, IT infrastructure, distribution, etc.  So you assume they will be motivated to partner with you – and you assume you know the cost.

Key Resources: There’s a lot you are assuming in terms of the key resources you’ll need to deliver the envisioned product or service.  How will you obtain them? What will it cost?

Key Activities: Do you assume that you understand the key activities that your company will need to implement to develop, sell, deliver, and support the envisioned product or service?

Don’t Just Assume – Form Hypotheses and Test Them!

An excellent first step is to capture all the assumptions assumptions you are making about the above topics.  A great way to do that is to use a one page business model canvas – the next step in the Startup Road Map.  And you want to capture those assumptions in the form of hypotheses that you can test by going out and talking to people.