In Lesson 7: Let’s Experiment we looked at experimenting with your ideas by creating a prototype and getting feedback. Now, because we’ve looked more at costs and we’ve talked about how important it is to keep your costs as low as possible, let’s look more at experiments and how they help keep costs down. Compared to a prototype, especially a low-fi prototype, experiments can be more concrete.
Testing an element of your business idea that you’re unsure about by running small experiments and trying things out for cheap or for free before you put any large amounts of money in is a great strategy! You can gain valuable learning that will shed light on uncertainties and potential risks in your business.
How do I do it?
Review your capabilities, resources, and revenue analysis and list your top 3 questions or unknowns.
For each question, design experiments that could give you more insights on the answers to the question/unknown.
Let’s take a look at the example of Zappos, the world’s largest online shoe store with annual gross sales of $1 billion. Click on the video to learn more!
Now let’s look at how the Grow-Well business might figure out what experiments to run and what to test:
Do people care about organic ingredients?
Creating realistic, helpful, cheap/free experiments is a great way to test your ideas and get answers. They also give you more detail and focus, as well as potential income, than prototyping.
You’ve been working on a business plan, setting SMART goals, and moving forward; essentially, you’ve developed an action plan (or multiple action plans) already. At this point, though, a concrete action plan for your first year of business can be really useful, as it pulls lots of these different things together.
What is an action plan?
It’s where you define your goals and the steps you need to achieve them.
It helps you prioritize what needs to get done, and you can focus on using your resources and time on what matters most.
How do you do it?
Think about the following questions; your answers = your action plan!
What is your Year 1 Goal that can be measured? (e.g., revenue for your first year, number of customers you want to reach, etc.)
What are the activities in the next 3 months that will lead you to this goal?
Let’s look at Grow-Well’s action plan:
My Year 1 Goal
- Total annual revenue: $50,000
- Get 100 customer reviews
My activities in the next 3 months:
- Get a food-handling licence
- Source commercial kitchen for rental
- Build a website
- Develop 20 recipes
- Test products with friends
This action plan will help get you on your way to your first year of business!