Should I quit my job to set up a business Part 2: How to validate an idea

Intro

I've launched weekly newsletter.

This newsletter is for people who run a business or want to run a business. I’ll be addressing all of the main questions you will come up against when you launch a business and during the running of your business.

The first question of course being “Should I quit my job to setup a business”

Alongside this deep dive into these important questions. I’ll be journaling the growth and ups and downs of my own agency, Bottled Imagination. These updates will always contain the highlighted version (the LinkedIn friendly version) and then the version of what really happened that week.

This won’t be fortune cookie advice from someone who has already ‘made it’.

These will be practical, real time thoughts and learnings from someone who is doing it right now.

Weekly journal 09/02/2024

The LinkedIn version

• I have a few days out of the office in London for the iGB affiliate conference and a client lunch. I soak up the big smoke on the tube and my walk to the luxury hotel I’ve booked as a treat to myself.
• The iGB put on some networking drinks. I work the room dropping entrepreneurial anecdotes like breadcrumbs.
• A client lunch, overlooking a moody looking River Thames. In person, this still seems like a rarity post covid.

• A new client signs on the dotted line…
• We meet with industry titan Paddy Moogan to chat about our journey so far and our next hurdles.

The real version

• I have a few days out of the office in London for the iGB conference and a client lunch. I soak up the big smoke on the tube and my walk to the luxury hotel I’ve booked as a treat to myself.

I immediately head to a Greggs. It’s the same as up North but they seem less happy to give me a sausage roll. On the tube nobody dares to break the fourth wall and admit they don’t like it here.

I realise my hotel room has no windows and I post about it on here to seek the validation that I said I didn’t need in last weeks newsletter

• The iGB put on some networking drinks. I work the room dropping anecdotes like breadcrumbs.

I stand by myself for a good 15 minutes. Why is nobody speaking to me and making this easier? Nobody sat next to me on the train down either. What's wrong with me? I stand with a beer and look out the window to the London Skyline to try and gain some main character energy back.

I finally chat with a guy for a good hour. Turns out he’s a bit racist so I head off to get a pizza and pick up an oxygen tank for my hotel room.

• A client lunch overlooking a moody looking River Thames. In person, this still seems like a rarity post covid.

My attempted networking shambles the night previous doesn’t put me in a mega confident mood for my client lunch. But, the one thing we have got lucky with at BI so far is how lovely our clients are as people. We chat about future activities over a steak. I’m still the kind of person who feels a bit ill when not they are not able to be on their phone checking emails or slacks. I feel immediately better for doing so though for a few hours and just chatting in person. I realise I need to do way more of this.

• A new client signs on the dotted line?

For 2025….Future me celebrates. Present me goes back to the pipeline we currently have and works on pitch decks on the train back from London.

• We meet with industry titan Paddy Moogan to chat about our journey so far and our next hurdles

I like thinking I know what I’m doing, who doesn’t? But I’ve reached out and sought help from multiple people I respect in the industry who have been there and done it/doing it. Accepting you don’t know everything and trying to improve is a big part of running a business. I’m massively grateful to anyone who has given up their time to give us some advice over the past few years. This includes the likes of:

Darryl Sparey (Chart.PR, FPRCA, FCIPR) Trevor Cairns Stephen Waddington James M. Jim Lewcock Andy Evans and loads of others (You know who you are)

Should I quit my job to set up a business? Part 2:

Okay so last week we went through some of the things you need to consider before you recklessly quit your job to set up a business that may or may not work.

Perhaps the biggest question you need to ask yourself is will this work and do I have enough evidence that it will?

How to validate your business idea

Service based

If you are planning on setting up a service based business, list out all of the people that know you and might be in a position to invest in your services. Can you convert 10% of them? Or even just 1 of them?

What does your maximum capacity look like and how does that translate as revenue? If you don’t have investment or much capital you may have to build up a float in order to make you confident enough to invest in new hires to help you scale. How long would that take?

What problem are you solving and who are you to solve that problem??

Then the most important question, is why should they trust? you to solve that problem?

Trust is possibly the biggest part of starting a service based business or any business really. List out all the questions that a potential client may have and see if you can answer them. Questions like “How are you going to deliver this work if there is just one of you?”

When I quit my job to set up an influencer marketing agency in 2016/17, the only people that knew who I was were my current clients and colleagues, who were tied up in a contract with my current agency.?

That was it. I was going to have to generate new business from nothing. So, if you have only limited contacts the next area you can go to is do you have a hook? I’d built up a network of influencers that had a following of over 20 million within sports specifically. I did that by cold outreach to them asking if they wanted to be part of the Brew Social network, in exchange I would bring them collaborations and paid opps. My hook for reaching out to sports clients was that I had this network and they could use them to reach their audience via content.

That was the basic premise. Then I found a tool that measures the brand value of football players based on their on pitch stats and their online and social media stats. I found I could manipulate this score by talking about these footballers through my influencer network. I then found a media agency who were using this tool to negotiate multi million pound contracts for their clients, their clients included world famous footballers, some of my heroes. I messaged them on LinkedIn saying I could increase their clients brand value scores.

So day one of launching my business I had meetings with 90/24 sports media agents and a massive online publication called Dugout.?

Day 1. Because I had a hook.

Now where trust comes into play is what comes next. The meeting with 90/24 went okay, quite exciting. Questions came up that I hadn’t thought of but overall there was something there.

In the meeting with Dugout I got destroyed.

“What is the CPC of your influencer network vs the paid channels we currently use?” – I Don’t know

“Why should we use your network over this other proposal we have that actually have a team?”? I Don’t know

“Can you answer these questions after this meeting or will you just waste our time” – It wasn’t that blunt but basically that. Close to tears at this point.

I had no trust in that room.

They had no idea who I was and no reason to trust me.

The above led me to my realisation that if you are going to launch a service based business do all the hard work before. Build your personal brand, build 5-6 examples of you doing that specific thing, bring tangible results. Gain that trust.

That’s how you validate a service based business.

B2C

An ecom or B2C business might be a bit different. It’s worth noting I’ve never ran a B2C start up but I did work at subscriptions base start up Jacks Flight Club which was acquired. I’ve used this process before and tested a few ideas using the below rationale

What can I do?

My skills, E.g. paid social, Wordpress sites, marketing, content, SEO, PR

What can’t I do or what don’t I want to do?

E.g customer service, payment platforms, code, design

What am I interested in and have a good knowledge of?

This isn’t a necessity. Sometimes the best business ideas are in the most boring niches but still I’d be thinking here something content led so I need to know it a bit.

E.g Sports, travel, TV and film, business, agency world, SEO, PR, agency sales.

Just by making these 3 lists writing this newsletter It has led me to come up with another business idea for the future so this does work.

Next I look at where are the passionate audiences? If an audience is passionate you can target them on paid social in particular. For example when I used to do paid social for Football 365, I’d promote an article on Eric Cantona to Man united fans, obviously, but I’d also target Leeds fans because they hate him. Picking a passionate niche is a great way to start and test an idea.

Then I list out what problems I can solve and start trying to spot gaps.

Gaps like there are no fishing bait subscription services? Yet demand for fishing bait is ongoing and there are a large number of anglers in the UK that buy bait on a repeat basis. The audience is also passionate about their niche.

The Bait Up test

Step 1: Google forms survey with incentive. Promotion across paid Facebook

Cost = ￡25 for 332 respondents?

Loads and loads of useful data back from this that really helps validate the idea and formulate the pricing model too.

Step 2: Basic website development with a sign up form to register for interest of the launch of Bait Up. This looked completely shit, but actually it shows how little you have to do to test an idea.

Step 3: Promote – Paid social to drive traffic to this page from a Bait Up social page. You can target people who are passionate about angling and also those who follow angling press

Cost - ￡45

Cost per click - ￡0.07p

Sign ups registering interest for launch - 118

Cost per sign up - ￡0.37p

Step 4: Cost up suppliers and packaging and logistics

I suck at this sort of stuff. But I reach out to multiple suppliers and package providers to get ideas of costs and cost per box if this is going to be a subscription service.

Step 5: Forecast figures

This is very very rough but you can forecast figures based on the data you have collected and put in average order values and churn rates as placeholders. This won't be accurate at this stage but it will give you a rough idea of a forecast.

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Idea validation 2: UK Breaks Club

Post Brexit what type of holiday is going to be more attainable and what does Brexit really say about 51% of the population?

My thoughts on this was that the staycation market was going to sky rocket post Brexit, which I was right about but mostly because of the pandemic and not Brexit.

There are services for cheap flights, newsletters like Jacks Flight Club, but not really for staycations or luxury getaways. The logic is the same, it’s based on demand and supply. The idea being that if an Airbnb is fully booked and someone cancels the week before they can go via UK Breaks club newsletter to fill it. Or if they have gaps in non peak periods they can offer discounts and go out to the UK Breaks community to fill those.

UK Breaks club would be a freemium model up until we have grown the community enough to warrant a paid model of ￡30 a year. You’d only need to make one trip via us to make your money back.

Blockers

I used the exact same process as the Bait Up test above but this time the cost per sign up was ￡1. At the time this was too much for me to be able to scale with my budget I had. Also, I had no way of getting Airbnb hosts on board or proof that they would be interested without substantial manual outreach to them.

I still like this idea but it never went further than the initial tests.?

So there you have a couple of ways you can validate your ideas before you take the plunge to setup your business. These can be done whilst in full time employment so you aren't jumping in with 2 feet with zero proof your idea will work. For both of the B2C examples, I only really spent around ￡150 - ￡200 maximum too.

If you have any feedback, questions or want to chat about becoming an entrepreneur you can drop me a message on here or over at https://bottledimagination.com/

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