A new business might be very safe: how to do it right?

If you were to take a business course, you’d come across ideas like value creation, marketing, product delivery, pricing, and cash flow management.

You don’t need a business school education to get the hang of these topics; they are pretty basic.

Value creation involves coming up with a product that provides value to people. Once you come up with an idea, you look into the market size of your product.

Is the demand high enough for your business to have a good chance of success? If yes, go with the idea. If the market is non-existent, ditch it.

After that, you care about issues like minimizing production costs, selling the product at a higher price, marketing that product, and increasing consumer satisfaction.

It’s no rocket science, right? Anybody with the brains to get the basics can run a successful business.

But then why do so many businesses fail to attract customers? Why do so many businesses not generate enough revenue to cover their costs and make profits?

The answer is an overwhelming — almost delusional — belief in one’s business assumptions.

These are described as “critical assumptions” in Josh Kaufman’s bestseller The Personal MBA. Your critical assumptions are statements that must be true for your business to run.

An example is assuming that your product would appeal to customers. Just because you’ve found a profitable market to sell your product doesn’t mean that people will like the product.

Imagine you’ve invested a million dollars in a furniture business, only to find that you aren’t getting as many orders as expected. You thought your classy furniture products would appeal to a specific market, but they didn’t.

What went wrong?

You simply did not test your idea before selling it. You skipped the introduction part and jumped to large-scale production of your idea.

Josh Kaufman introduces two more ideas in his bestseller: shadow testing and a minimum viable option.

Shadow testing means testing your product before you start its production. It includes distributing pamphlets with product descriptions, making a website, and including product details. The option to pre-order should be given to estimate the number of future customers.

If the feedback is positive, go on with your idea.

A minimum viable offer is the offer you make before making a sale. It includes product images, descriptions, features, etc.

Without shadow testing and a minimum viable offer, an entrepreneur would be taking a risk, assuming their product would instantly appeal to the market.

Anybody looking for a great book on business should read The Personal MBA by Josh Kaufman.