“This is it, the business idea that’s going to make us RICH. People will love it; it’ll fly off the shelves!”
– this statement might be followed by months hard work, a not insignificant sum of money invested and a product launch. However, when the results of the effort are less than anti-climactic and the sales a trickle rather than a torrent, the feeling of failure and of waste is confidence-denting.
People who are consumed with the entrepreneurial spirit, are quite often afflicted with something else I like to call “Entrepreneur’s Blinkers”. It manifests itself as an inability (or unwillingness) to see anything but the positive aspects of an idea, product or strategy. Often it can result in a start-up barreling towards a dead end without taking a breath... phew! Failing to gather information, research the market, test assumptions and validate ideas - I know this only too well as I too have worn the same blinkers in the past.
But don’t get me wrong, established SME’s can be just as susceptible to “Entrepreneur’s Blinkers” as any start-up.
Assumptions - the mother of all ...
As a species, human beings tend to lean toward positivity and ignore the negative (it’s called Optimism Bias) - this is especially true of entrepreneurs and serves us well in business but can also have its downsides. For example, we tend to make hypotheses and never test them.
(by the way, The Lean Start-Up has fantastic sections on the testing of hypotheses for start-ups)
Without testing these hypotheses, everything that we think about our product, our customers, and the market is just an assumption. But how do we test these hypotheses and validate our ideas?
This is where Feasibility Studies come in – essentially, they force the entrepreneur to answer the tough questions… well!