Researching the market and testing the idea before you spend a pound
A restaurant owner in an upmarket district spent over half a million in three months on rent, equipment and staff, then emptied the place and closed it. He entered the market before he asked the market. Nine in ten small businesses fail, and most fail on paper before they open, because the paper was never written. This lesson is about the paper.
What you'll have at the end
A feasibility study on one page, a test of the idea that costs a week and not your savings, and an honest answer to "will anyone buy?".
Step one: write down the problem you solve
A business that lives solves a real problem for a lot of people. "I love cooking" is nobody's problem. "Staff in the industrial zone can't find a clean lunch under 25 dirhams" is a problem, with a known number of people who have it. Write the problem in one line, who has it, and roughly how many they are.
Step two: ask the market, not your family
Your family and friends will say the idea is wonderful, and that politeness costs you your savings. Go to the people who have the problem and ask twenty of them: would you pay for this? How much? What do you do instead right now? A short survey and twenty honest answers beat a hundred likes.
Step three: the feasibility study on a page
You don't need a thirty-page file. One page with: where you'll sell and to whom, who sells the same thing in the area and for how much, what one unit costs you in full with materials, labour and packaging, what you'll sell it for, and how many units a month you need to sell to cover rent and wages with something left for you. That last number decides. If you have to sell three hundred lunches a day to cover the premises, the premises are bigger than the idea.
Step four: test in the cheapest form possible
Before the lease and before the equipment: a prototype. Sell twenty meals from the home kitchen in one day, offer the service to ten people and ask for a deposit, make ten pieces by hand and put them on a page. If people pay, you have a business; if they admire it and don't pay, you have an answer cheaper than anything else. The person who built a production line before selling anything in advance is the one telling the restaurant story.
Step five: run the idea through five conditions
A business worth years of your life passes five: it solves a real problem for many, it's hard to copy because you have a skill, a relationship or a cost nobody else has, it can grow without its costs doubling at the same rate, you own the decisions, with no platform able to change its terms on you, and one day it can run without you standing in it every day. You won't find all five in your first idea, and if you find three, start. A digital product, a course, a book, an app, meets the third easily; a restaurant doesn't.
Where most people trip
On spreading thin. A restaurant serving pizza, shawarma, fish and international dishes loses to a place that sells one thing and does it well. Pick one product, be the best in the area at it, then widen.
Tonight's exercise
Write the problem in one line and who has it. Write the names of twenty of them you'll ask this week. Then write the cheapest test you could run over the weekend without spending more than 500.
Questions I get asked
I have no capital, how do I start?
The first obstacle is the untested idea, well ahead of capital. The test in this lesson costs under 500, and whoever passes it finds the road to funding easier, through a partner, savings, or a customer paying in advance.
My idea already exists in the market.
Good, that means it has customers. The question is what you'll do better, cheaper or closer. If you have no answer, look for an idea where you have an edge nobody else does.
Do I start with a social media page or a shop?
A page is a free test; a shop is a year's commitment. The test always comes first, and lesson 8.3 covers an online store on a small budget.
Log every dirham the test spends in Fawatery under a category named after the business, so after the first week you have a real unit cost instead of an estimate
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Based on: "Catastrophic mistakes that kill your small business" and "The fast road to wealth, wealth books summary".
The idea passed the test and people started paying? The next lesson is about the thing that kills businesses that are profitable on paper: cash leaving faster than it comes in.