How Critical Assumptions Can Make or Break Your Business
“Am I working on the things that matter most?”
“How can I get more traction?”
“Do I have enough cash to keep going?”
These are just a few of the questions that keep entrepreneurs up at night. Unfortunately I’m not here to give you a magic way to erase all those worries. But I can give you one piece of advice that’ll make organizing and prioritizing your questions a little easier: work on your critical assumptions.
Find the guesses that absolutely have to be true for your business to succeed.
Every entrepreneur makes guesses. What they’re doing hasn’t been done before. Ask yourself, “what do I think is true about my customer, their problems, my product, and my team?” Write down things like “I believe my customer is ____” or “I think _____ is a problem that _____ is trying to solve.” Make a long list. Then rank each guess based on how detrimental it would be if you’re wrong.
Take the top of your first list and rank those assumptions by how much or how little you know about each.
The most important word in that sentence is “know”. You need concrete evidence to know something is true. Evidence comes in all forms – from unbiased consumer feedback and third party research to prototypes and sales. But don’t be fooled into thinking you understand a customer’s problem just because you’ve experienced it yourself; in fact, you might be an outlier or you might have misunderstood the problem. The key to this step is being honest with yourself about how much you actually know versus how much you’re assuming.
Work on validating the guesses that are both highly unknown and really important.
If, for example, you think young mothers will love your new diaper bag, your most important/least known assumption might be that moms don’t have enough space is their bags. The best way to confirm your hunch is to spend a lot of time talking to moms about the problems and pains they face when they’re in transit. All of your other guesses can wait – if you’re wrong about the problem you’re solving, perfecting other aspects of your model could turn out to be a huge waste of time.
The cycle doesn’t stop. Once you’ve learned enough about one critical assumption, move on to the next. By following this simple pattern, you’ll not only prioritize your time wisely, but you’ll also be learning and adjusting your business model. That’s more than a great way to get traction – it’ll also save you time and money and help you build things customers actually want.
Want to know more about the MAGNET Incubation Center? Visit magnetincubationcenter.org to learn about membership, meet the team, and more.
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