Are you a new entrepreneur navigating the waters of the startup community for the first time? If you have been doing the rounds in co-working spaces, accelerators, and incubators to ideate on your killer startup idea, you may have heard several terms that can be a little bit of a head-scratcher.
If you want to win the game of entrepreneurship, it is imperative that you familiarise yourself with startup terminology. This article will walk you through the top 10 terms you need to know if you are in the ideation stage of your startup.
Additional read: A STEP-BY-STEP GUIDE TO START A STARTUP IN INDIA
First things first, you need to know what ideation is. It's the initial stage of your business when it hasn't even taken birth yet. You may have identified a pain point in the market and now, you want to come up with solutions to fix it. The ideation stage involves brainstorming, prototyping, and sketching ideas with your team to narrow down a product or service that will solve the problem you are trying to address.
Once you have identified what your idea is, the next step is to identify your target customers. A target market is a group of customers who are the perfect users for your product or service. These customers have similar characteristics '“ demographics, income group, location, lifestyle, etc. For instance, a Hindi gaming app may be targeted at youngsters aged 18-30 who have a disposable income to spend on entertainment and are located in North India.
Identifying your target market is a cornerstone of business because a bulk of your sales and marketing tactics will be aimed at them. It is useful to identify the target market in the ideation stage of your startup because you can also use them to conduct market research and test your minimum viable product.
Proof of concept determines whether the idea or concept that you have is technically feasible, commercially viable and can address the problem in the market effectively. You can check proof of concept by talking to a select group of potential customers and receiving their feedback. You will also need to test for a revenue model, cost structure, and potential profitability. Once you have established that your idea is feasible, you can proceed with your startup with confidence.
Minimum Viable Product (MVP) is a basic version of the product or service you plan to take to the market. An MVP has only the core features necessary to test its effectiveness in the market. Usually, an MVP uses bare minimum investment to gauge the target market's interest. You can then build on this concept to create a better and more advanced version that will make it sellable.
Problem-solution fit refers to how well a startup's product or service addresses a specific problem or need in its target market. To simplify, problem-solution fit means that the startup has found a real problem that people are facing and has created a solution that effectively addresses that problem. It involves understanding the target market, identifying the challenges or frustrations that potential customers are experiencing, and developing a solution that solves those problems in a unique and valuable way.
Every idea has already been thought of. Startups often have direct or indirect competition. Competitor analysis is the process of evaluating the strengths, weaknesses, strategies, and offerings of competitors of a startup and the industry it operates in.
By conducting a competitor analysis, you can determine how a startup's product or service stands out from its competitors. You can pinpoint unique selling points, competitive advantages, and any gaps in the market that the startup can exploit. It also provides insights into the startup investment risk, market size and growth prospects.
Before you roll out your product in the market, it is advisable to conduct an alpha test. Alpha testing involves testing your product or service in a controlled environment. Typically, it is done internally or with a small group of early users. Alpha testing can help you identify critical issues, bugs or other concerns that need to be fixed before you release the product publicly.
After alpha testing, entrepreneurs often go in for a round of beta testing. This is the final phase of testing out your product's viability in the market. It is released to a wider group of users to identify any loopholes that may have been missed. This is the chance to fine-tune your product before it goes into production and shipped out to the wider market.
A lean startup is a startup methodology that focuses on reducing waste, maximising learning, and efficiently bringing a viable product to market. The lean startup approach emphasises the importance of testing assumptions and hypotheses through real-world experiments. Rather than spending too much time and resources to build a product upfront, lean startups focus on building a minimum viable product (MVP) with essential features. This allows them to release the MVP to the market, measure its performance, gather user feedback, and learn from the data and insights obtained.
The lean startup approach helps to mitigate risk, improve resource efficiency and focus on evidence-based decision-making. It can help startups succeed more quickly.
Design thinking is an approach that puts users at the heart of the development process. A startup that focuses on design thinking spends time to understand user needs and problems and develops solutions that are user-centric. It encourages creative thinking, brainstorming, and exploring unconventional ideas. This mindset can lead to the development of unique and differentiated solutions that stand out in the market. Investors are often drawn to startups that demonstrate a creative approach to problem-solving and have the potential to disrupt existing industries.
Sinking your teeth into startup terminology can seem daunting, but if you go step by step, you'll catch up in no time! Armed with these terms, you can walk into any startup networking group without feeling like a deer caught in the headlights.