The document provides advice on answering 3 key questions to successfully start a business: 1. Is there a gap in the market - conduct customer interviews to validate an identified problem and ensure there is demand. 2. Is there a market in the gap - determine the market size and growth potential, and that the opportunity is large and profitable enough. 3. How to consistently deliver value - develop a business model canvas to outline how value is created and delivered to customers, and test hypotheses with customers to validate the model. Continually adapting based on feedback is important.

1. Got an idea and want
to start a business?
3 Questions to Answer

2. Inspiration has struck you with a
genius idea for a business, but how
exactly do you build your idea into a
sustainable business?

3. “It will take more than INSPIRATION.
It will take PERSPIRATION……”
“Genius is one percent inspiration and 99 percent perspiration.” – Thomas Edison

4. You will perspire to find the right
answers to 3 important
questions……….

5. Question 1
Is there a gap in the market?

6. Specifically,
• What is the ideal customer experience? Is there a gap between customers’ actual and
ideal experience? (Gap Analysis)
• Exactly what problem will this idea solve or what gain will it offer? (Value Proposition)
• For whom do we solve the problem and offer the gain? (Target Market)
• Is our target market already looking for a solution to the identified problem and gain?
Are they willing to pay for a solution? (Customer Profiling)
• Why is this idea best suited to solve the problem or offer the gain? (Our Differentiator)

7. “The way to spot gaps in the market is not to try to think of startup ideas. It's to
look for problems, preferably problems you have yourself.
The very best startup ideas tend to have three things in common:
– they're something the founders themselves want,
– that they themselves can build, and
– that few others realize are worth doing.
Microsoft, Apple, Yahoo, Google, and Facebook all began this way.”
- Paul Graham
Founder, Y-Combinator

8. It is important to work only on problems that
really exist

9. It sounds obvious to say you should
only work on problems that exist.
And yet by far the most common
mistake startups make is to solve
problems no one has.

10. There is only one way to
find out if the problem
you want to solve
exists………

11. Get out of the building and
talk to people about the
problem and your solution
to the problem

12. A startup begins with a vision: a vision of a new product or service. A vision of how
the product will reach its customers, and a vision of why lots of people will buy that
product. But most of what a startup founder initially believe about their market
and potential customer are just educated guesses. To turn the vision into reality
(and a profitable company), a startup must test these guesses, or
hypotheses and find out which are correct. So the general goal is to
turn the founders hypotheses about the market and customers into facts. And since
the facts live outside the building, the primary activity is to get in front of
customers.
Only after the founders have performed this step will they know whether they have
a valid visionor just a hallucination.
Steve G. Blank (The four steps to the Epiphany)

13. Remember, you don’t necessarily need to come up with a
brand new idea or invention. You simply need to take an
existing idea and do it better. You may be faster, cheaper or
have a better focus on customer service - either way you
need to find a differentiator.
You only need to ensure that there are people who consider
your product to be a solution to a problem they are willing to
pay to get solved.

14. The right answer at this phase will be
1. A better understanding of your target customers and the problem you
are trying to solve for them. (From the customers perspective)
2. A fine-tuned and validated vision for your product and solution
3. Facts and confidence to attract and convince partners and investors

15. Question 2:
Is there a market in the gap?

16. Is it profitable or going to be profitable to
commit resources (time, effort and money)
to solve the identified customer problem
and seize the opportunity gap in the
market?

17. • How big is the opportunity you are trying to seize and how big is it expected to
become? (Market Size)
• Why now? (Market Window)
• What alternatives are out there? (Competitive Landscape)
• Is your business scalable? (Does the business have the potential to multiply
revenue with minimal incremental cost)

18. How Big is the Pie?
Total Available Market
Total Available Market
• How many peoplepeople would want/need
the product?
• How large is the market in
($) if they all bought?
• How many units would that be?
How Do I Find Out?
• Industry Analysts
• Published Market Reports

19. How Big is My Slice?
Segment Available Market
• How many people need/can use product?
• How many people have the money to
buy the product?
• How large would the market be ($)
if they all bought?
• How many units would that be?
How Do I Find Out?
• Talk to potential customers
Segment
Available
Market
Total
Available
Market

20. How Much Can I Eat?
Target Market
• Who am I going to sell to in year 1, 2 & 3?
• How many customers is that?
• How large will the market be
($) if they are all bought?
• How many units would that be?
How Do I Find Out?
• Talk to potential customers
• Identify and talk to channel partners
• Identify and talk to competitors
Total
Available
Market
Target
Market
Segment
Available
Market

21. You should have answers to the following market size questions
– How big can this market be?
– How much of it can we get?
– Market growth rate
– Market structure (Mature or in flux?)
• Most important: Talk to Customers and Sales Channel
• Next important: Market size by competitive approximation
– Market Analyst reports are great

22. Question 3
How best do I consistently deliver
value to my target market?

23. “A business model describes the rationale of
how an organization creates, delivers and
captures value to its targeted market
segment.”
- Alexander Osterwalder and Yves Pigneur

24. A business model canvas developed by Alexander Osterwalder and Yves
Pigneur has become popular for developing, describing and thinking
through the business model of businesses.
The business model canvas contains nine (9) building blocks that
interact to form the business model of an organization.

26. CUSTOMER SEGMENTS
which customers and users are you serving?
which jobs do they really want to get done?
images by JAM

27. VALUE PROPOSITIONS
what are you offering them? what is that
getting done for them? do they care?
images by JAM

28. CHANNELS
how does each customer segment want to be reached?
through which interaction points?
images by JAM

29. CUSTOMER RELATIONSHIPS
what relationships are you establishing with each segment?
personal? automated? acquisitive? retentive?
images by JAM

30. REVENUE STREAMS
what are customers really willing to pay for? how?
are you generating transactional or recurring revenues?
images by JAM

31. KEY RESOURCES
which resources underpin your b.model?
which assets are essential?
images by JAM

32. KEY ACTIVITIES
which activities do you need to perform well in
your business model? what is crucial?
images by JAM

33. KEY PARTNERS
which partners and suppliers leverage your model?
who do you need to rely on?
images by JAM

34. COST STRUCTURE
what is the resulting cost structure?
which key elements drive your costs?
images by JAM

35. key value customer
activities proposition relationships
key customer
partners segments
cost revenue
structure key streams
resources channels
images by JAM

36. “Hmm, interesting so
what do I make of
that?”

37. use it as a tool to...

38. sketch out your own business model

42. Take the time to come up with
alternative business models

43. the same technology, product, or service
can have numerous business models

45. try sketching out alternative
business models by asking
yourself...

46. transactional vs.
recurring revenues
niche market vs.
mass market
capital expenditure vs.
partnership
product vs. service
direct sales vs.
indirect sales
open vs. closed
scale vs. scope
blue ocean vs. red
ocean
personal vs.
automated
difficult questions
one customer segment
vs. another
paid vs. free
distributed vs.
centralized
physical vs. virtual
copyright vs. copyleft
in-sourcing vs. out-
sourcing
production
fixed vs. variable
costs
advertising vs.
sales

47. only make a first choice after prototyping
and thinking through several models...

49. OK. You’ve got your preferred model,
but you’re not done yet...

50. Your business model idea
is still a set of hypotheses.

51. a business model might look great on
paper...
ng
k
building ... but be
honest that it’s

52. ... just a set of hypotheses

53. ...so you need to get out of the
building and...

54. test each hypothesis
with customers

55. product
market
type
competition
test your hypotheses and adapt your business model

56. problem
customer
user
payer
test your hypotheses and adapt your business model

57. channel
test your hypotheses and adapt your business model

58. demand
creation
channel
(customer)
(problem)
product
market
type
competition
validate business
model
channel
pricing
model
problem
customer
user
payer
test your hypotheses and adapt your business model

59. Until you have a proven business model
and a “minimum viable product”
customers are willing to pay for

60. In conclusion………

61. When next you have that great idea and want
to start a business………..

62. Be sure that there are people who care about
the problem your idea seeks to solve
1

63. Confirm that the size of the opportunity
makes it profitable to commit resources
2

64. Ensure that you have a proven business model
that sustainably captures and delivers value to
the target customer segment
3

65. Once you have a proven business model and a
product, it is time to scale your marketing.
4

66. Thank You
Iyayi, Era Abraham
@eraiyayi

67. Credit
• http://www.slideshare.net/sblank/presentation-examples-for-class-2-mkt-size-and-hypotheses-testing
• Internet Search