The following is a guest post by Dr. Mark Simon, Ph.D.
So, let’s say that you have an idea for a new business that you think is a “real winner!” You personally believe that the product or service behind your startup idea will be desired by enough consumers to earn a consistent profit, and you’re prepared to ask others for their feedback to see if they agree.
After the discussing the idea with others, you conclude their feedback was very positive. Sounds like you’ve been given the green light to proceed and initiate the first stage in launching your business, right? After all, you’ve determined that other people think your idea has as much potential for success as you do. You’re ready to press the “GO” button,
You may have gathered positive feedback, but how accurate is it? How many people did you ask and who are they? Many entrepreneurs place a great deal of confidence in feedback that is unreliable – feedback that leads them to start a business thatfails.
When collecting feedback from other individuals, make sure you avoid these common pitfalls:
How large is the sample of people you’ve presented your startup idea to? Assume 75% of your feedback sample responded positively to your idea. You could, for example, have gathered positive responses from 3 people out of 4. However, does this imply that a larger sample – let’s say 20 people – would result in 15 positive responses, keeping the same 75% rate? Not necessarily!
Assuming that a small sample of 4 people would produce results that are close representations of the population involves a fallacy known as a belief in the “Law of Small Numbers.” Make sure you seek feedback from a sizable number of individuals to minimize the risk of receiving responses that are significantly different from the entire population that is relevant to your startup idea.
Who did you include in your sample when you asked your feedback? Did you reach out to a diverse group of people that have the experience and courage to tell you that your idea is “doomed” if they see major problems with your line of thinking? Do the people really represent you customers? Or did you simply seek approval from a close social circle or family members that would love to give you encouragement, regardless of the true feasibility of the idea?
The people closest to you are more likely to give you positive responses. You can gain more accurate responses by adopting a random selection process. In other words, don’t be afraid to gather advice from a wide variety of knowledgeable individuals, including those who are likely to be highly critical and raise objections. Even better, make sure they represent your market.
When you find yourself in need of feedback regarding your specific startup idea, be aware of the size and quality of your sample. Are you asking enough individuals; i.e. more than just a “few”? Are they individuals that are willing to be realistic and give you honest feedback? If not, you may be setting yourself up for major disappointment: Starting a business that you think is destined to succeed, when the reality is that consumers don’t respond as predicted by you and the feedback of others.
Entrepreneurs are prone to other decision making errors. You can read more about this topic, including an explanation of four more common errors: www.thebalancedentrepreneur.com/