Before getting things started with your new business, you must seek feedback from friends or family
Getting honest feedback isn’t as simple as it sounds. Most times, you might not get direct feedback from a friend because they feel it is their responsibility to encourage you instead of making you feel bad. Also, some investors might pretend to like your new idea just because they want you to quit talking. At this point, you are now faced with the problem of not knowing if your business is a great and profitable idea, even though people around you might not be truthful.
Don’t just get excited that investors like your idea; you should only be happy when they back their words with actions by funding your business.
One of the reasons it isn’t very easy to get an honest response from friends about your business or idea is because you do not ask the right questions. In this article, you will learn how to structure your questions to get truthful answers from your interviewees, even if they’re your close friends. You will know how to ask questions that pass the Mom Test, a series of questions that enables you to talk less and listen more about the life of your potential investor or customer instead of your idea and the specific past details instead of opinions about the future. This test is called the Mom Test because it leads to questions that even your mother can’t lie to you about. Towards the end, the article will show you how to deal with investors, pitch your ideas, and follow through until they invest (if they’re willing). We will also shine a light on the importance of avoiding the mistake of mentioning your ideas too soon and how you can improve your customer conversations.
Did you know? People want to help you but will rarely do so unless you give them an excuse to do so.
Be sure to ask the right kind of questions to gather useful information about your new business idea and target market
To become a successful entrepreneur, you must be skilled when asking questions, especially those that will point you in the right direction. By doing so, you are developing and advancing your business idea.
Stop talking about your idea and start asking about it.
Asking will help you learn more about your idea, particularly its advantages and disadvantages of it. You can ask strategic questions like the problems your potential customers might have faced and the kind of solutions they are searching for.
If it’s something they are not willing to pay for, you will not have to waste your time and money trying to develop a solution that won’t sell in the market.
One of the reasons people miss asking important questions is that they get themselves too deep in the details before understanding the big picture. Many people have serious issues they don’t know how to fix, but they’ll happily relate their problems if you ask them. So, don’t be afraid to ask questions, especially if you plan to offer something of value in the end.
As a rule of thumb, always have a list of three important questions to ask your target market.
Make sure you look for commitment from investors and try to deflect compliments
When pitching your idea to potential investors or sponsors, be sure to study their body language and expressions to know if they are interested.
Also, learn to recognize the signs of a good or unproductive meeting. If investors are interested and want to commit to your idea, they will ask specific questions, about your terms, and the positive impact it will reflect after investing.
When investors become bored with your presentation, they tend to compliment you for a job well done just to get rid of you. This is a red flag that signifies a meeting gone wrong. When this happens, try to deflect the compliment by re-strategizing your questions, then get on with the business of gathering facts and more ideas.
When investors refuse to ask questions but instead give compliments quickly, it’s a sign that they are almost certainly lying. But it may not necessarily be intentional. Some investors believe they are being supportive or protecting your feelings; however, they’re not helping you at all.
Aside from industry experts who have built similar businesses, opinions from potential investors that don’t bring commitment are almost certainly worthless; contracts pay more than compliments. Hence, the best way to escape the misinformation or deception of compliments is to avoid them altogether by not mentioning your idea. If you do make that mistake, deflect the compliment, and move forward with your presentation.
Look for opportunities where you can have some casual and relaxed meetings with potential investors and customers
You often find yourself sitting through awkward meetings that tend to drag on for hours and may not be productive. When trying to pitch your idea to an investor, there are some strategies that you should put in place to make your meeting effective. Being casual is one way to have a successful discussion with potential investors.
Have your conversation in a calm, relaxing, and cordial environment so that they can open up to you about their feelings and any fears they may have.
Second, keep the formalities minimal and respectable. You can start by asking about their day, problems regarding your product, and their ideas for solving it. This will encourage you since they feel you are genuinely interested in whatever they have to say.
Being too formal can make the meeting awkward, causing the main purpose of the meeting to be lost.
Asking the right questions and learning from your customers or potential investors doesn’t mean you have to be too formal about everything. Relax the conversations you have, and you will more likely get on your target’s good side.
Focus more on a small group of targeted customers; find out what they want and how to meet their needs
Most innovators are usually filled with customer demographic options and product ideas; it’s just something that comes with being an innovator. However, you do not need to tackle all your options at once. Doing so weighs you down and distracts you. So, focus on a small group of targeted customers to get useful and valuable information your company can use later.
For example, you might go after a specific group like employed men between 18 and 25 who will be training for a marathon next year. Men in this category will be looking for specialized training activities and a healthy diet plan that will help them prepare for the marathon. This is where you come in and sell them your specific app or personalized product that will help them train better; the internet is filled with too much general information, making it difficult to decide which product to trust.
Once you have identified your target audience, get to know more about them and learn all there is to know about what they need.
It is not impossible to select a target customer and imagine what they want, but sometimes, as a creator, you will be the one to implement what your target audience wants.
Did you know? In the early stages of a business, the real growth is in learning, not in revenue.
Push for advancement and commitment when presenting your business ideas so that you know if you are on the right track
When investors are honest with you, they tend to open up — the more they do, the more you can trust their judgment.
If you do not know what happens next after a product or sales meeting, the meeting was indeed pointless.
In every meeting, you will have to force a resolution because the meeting will likely drift off and lead you nowhere if you don’t.
When you fail to push for advancement, you will end up with no leads, and potential customers or investors will keep playing you, never seeming to cut a check. This is a result of being clingy and fearing rejection. You can get out of the unproductive zone and identify the real leads by giving them a clear chance to either commit or reject you.
If perhaps you find yourself entangled in a meeting that is not going as planned with your potential customer or investor, try to convert their uncertain promises into something more concrete. But don’t appear desperate or pushy. It only means aiming for commitments by figuring out your potential investors’ next steps.
The goal is just to put your potential investor to a decision, so you will know whether you’ve found a real investor or not.
Did you know? Investors and customers aren’t won over until you’ve given them a concrete chance to reject you.
Keep the conversations with clients or investors simple and interesting
Don’t go into sales discussions looking for customers. It creates a situation where you’ll appear needy and desperate, and then you’ll forfeit the position of power.
Rather than go that path, find industry experts or customer advisers to interview. Ask them important questions about your business and the product or service you’re building, then listen to what they say. They will provide quality and valuable information because they know how the industry is flourishing and which businesses are making waves.
Also, successful conversations don’t require you to only talk to the most senior or important people you can find. Talking to people who represent your current and prospective customers, not those who sound impressive on your status report, can yield a better positive response.
Talking to customers and investors is a great tool but shouldn’t be seen as an obligation. If it’s not going to help you, skip it.
How to know if your conversation was a waste of time:
- The meeting involved you talking more than the other party.
- The other party complimented you or your idea without making any commitments.
- You left the meeting still not knowing what’s happening next.
How to have a successful conversation:
- Plan your meeting with your team and have notes highlighting the issues you want to mention, no matter how informal the meeting is.
- Keep it casual, ask questions that pass the Mom Test, deflect empty compliments, and dig beneath positive or negative signals to know what they mean.
- If the other party appears interested and relevant enough to pursue, press for their commitment. Leave the meeting knowing what the next step is.
Now that you know if your business idea is good or bad, you need to adjust accordingly. With these sets of rules learned, you are on track to gather enough data to kickstart your business idea and easily identify problems and fix them before they get you in trouble. Always pre-plan the three most important things you want to learn from any individual you meet to make details easier to remember. Being prepared also makes it easier to face difficult questions and answers and avoid unplanned conversations where you tend to focus on trivial stuff to make the conversation comfortable. Your three questions will mostly be different for each type of person you’re talking to. If you have multiple types of customers or partners, it’s appropriate to create a list for each of them. Some founders just lazily use the same questions for everyone they meet without conducting prior research on the people they’re talking to. The more time you spend researching your customers or investors and the more targeted questions you ask them, the greater your chances of success.
When meeting with possible, future, or current investors, avoid starting with a phone call — phone calls sound more like scripted interviews than natural conversations. So, begin in person; people rarely become friends over the phone. Nowadays, it is too easy to use surveys or phone calls as an excuse to skip the awkwardness of meeting an individual in person, which is not suitable for your business.
Before going into a meeting, write out your most important questions for the investors and customers. Doing this will help you note the important things before the meeting even starts.