Over the years, as I’ve coached talented business leaders, I have heard thousands of passionate proposals about the next best idea, concept, product, or service from my clients. I love their creativity, energy, and boundless confidence, but part of running a business is learning how to validate a business idea, not just thinking up the next big thing.
While I don’t want to play the part of “downer Dave,” my obligation to my clients is to help them evaluate business ideas and see ideas clearly and objectively. One of the best ways to add rigor for a fair evaluation is to challenge them to prepare a pitch deck explaining the idea and present it to me as if I was a fictional outside investor or their imaginary board of directors.
Creating a Pitch Deck
If you need help learning how to validate a business idea, a pitch deck can be a godsend. The systematic ritual of the pitch deck provides amazing clarity for the business leader regarding their new ideas. The process will help them decide if the idea will hold up to scrutiny or obvious flaws.
For those who are new to a pitch deck’s idea, Guy Kawasaki outlines a great 10-slide process in his book, The Art of the Start. He claims that the 10 slides you need in your pitch are as follows:
- Title: This is self-explanatory. Give your idea a snappy title.
- Problem or Opportunity: Explain the gap in the marketplace that your idea will fill. Is there really a need for your product or service? What problem does your idea solve?
- Value Proposition: Explain the value of your solution to the customer and market.
- Underlying Magic: Why will you be the one to pull this off? Describe why your solution is clearly the right one.
- Business Model: Talk about how you’ll generate sales and profits.
- Go-To-Market Plan: How is your idea going to reach your target audience?
- Competitive Analysis: What are your competitors offering, and how will you beat or avoid them?
- Management Team: Who are the key players that will bring your vision to life?
- Financial Projections and Key Metrics: Provide a three- to five-year forecast, including all-important metrics.
- Current Status, Accomplishments to Date, Timeline, and Future Funds: Where are you right now, and how will you get where you’re going? How long will it take to get you there, and how will you pay for it?
In terms of how to validate a business idea, skip slides 8 and 10. When you answer these questions as though preparing to make a presentation to an unconvinced audience, you will see your idea in a different light.
The pitch deck is a great tool to take you through the critical thinking process. If you keep these things in mind, you’ll be well on your way to learning how to validate a business idea.
Developing a business pitch can help you see your own ideas clearly. An outside perspective is useful, too. Fill out my contact form for a complimentary coaching session, and I can teach you how to validate a business idea.
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