How to Test Your New Business Ideas?

Some of the most successful and greatest entrepreneurs and inventors have admitted to failing at some point in their illustrious careers. However, Richard Christensen, successful entrepreneur and author of the book, The Zig Zag Principle, says that failure is a normal part of business; however, the majority of us are not equipped to “fail efficiently.”

He makes his point by using the skiing analogy for teaching entrepreneurs to take deliberate diversions when they are on the road to success. This helps in avoiding catastrophic failures that can lead to personal and financial ruin. Christensen says that during skiing, one does not take his or her skis and point them directly down the mountain because this will result in a severe disaster.

This business approach is poles apart from that taught in business schools. Christensen goes on to say that in business one is taught to conduct a performance analysis and set a big goal and directly charge towards it. He says that this approach is the reason for only one in 10 business ventures succeeding.

Instead of bulldozing your way towards a specific goal, Christensen advocates to slow down and alter your course. He calls this process “zigging” and “zagging”. This process helps achieve success, and if there is failure, the business fails “efficiently”. Here are 4 of his tips to test your new business ideas.

1) First Think of Profitability

The first tip in testing your new business ideas is to think of profitability first. Christensen recommends that new ventures begin by focussing on profitability. He goes on to say that think about the fastest ways to profitability, even if there is a minor diversion from the overall goal. Christensen is the proud founder and co-founder of 32 business ventures, each with 5 to 10 thousand dollars. 11 of these ventures failed, whereas 13 became million-dollar success legends. While deciding a pre-fixed amount of resources that you are willing to risk as part of the business venture, whether it’s a new business idea or business, Christensen suggests to devote 65% of the capital towards the profitability goal, 25% to resources such as staff, and 10% to scale.

2) Ensure that Failure is Efficient

Christensen terms a new business idea as a failure if profits are not earned within a pre-determined time frame. However, he calls this failure an efficient failure. The time frame for success will differ from business to business depending on how much investment you’re ready to make in your venture. Some entrepreneurs will spend years staring at losses before quitting. Efficient failure means not having to spend tons of money and years of hard work if profit is not achieved in the first three months.

3) Focus on Your Goals

After earning profits, which Christensen calls the first “zig”, the business venture moves towards the first “zag”, which involves allocation of 65% of resources to staff, structures, and procedures, 25% to scale (through franchising or expansion), and 10% to profitability. This process of “zigging” and “zagging” should continue utilising this resource allocation model that rotates through resources, scale, and profitability, throughout the tenure of the business.

4) Slow Down

Christensen admits that organisations that follow the zig-zag principle will take longer duration of time to achieve their goals. He goes on to say that that by setting clear-cut goals when it comes to people, time, and capital in the business venture, ventures can be more stable and the decrease in speed may give rise to pleasant surprises.


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