You as an aspiring entrepreneur might have a revolutionary idea; but it will remain an idea if you don’t take the right steps to create a business. Furthermore, one of the biggest hurdles you will face is utilising what little resources you have to start your business. Focus on the wrong thing, and you will run out of funds even before you even take a step. Paul Graham of Y-combinator aptly said, “When and if you get an infusion of real money, what should you do with it? Not spend it, that’s what.” 

Being cheap is not a negative trait in the startup world; it’s something that will do wonders in keeping the startup alive. This becomes true even more so when you only have a few thousand rupees to begin with and want to successfully go from an idea to a full-fledged business. At a time like this, what you spend on could make you or break you.

Determine market potential

One of the best decisions you can make is to invest in understanding the potential of your market. And while it seems obvious, it isn’t practiced by many entrepreneurs. Most of us are inclined to trust our instinct about the potential of an idea. However, it’s a big risk to take, and a potentially costly one. For instance, you might see that the market for virtual reality content is growing in the US, and make the same assumption about the market in Nepal. This, however, would be a big misunderstanding as the markets are vastly different, and what works there might not work here.

The best thing to invest on is conducting market research on your idea. For example, if you want to open a bakery in Kathmandu, you have two ways to approach it. Firstly, you can conduct an internet search about the market size of the bakery business, the average sales made, the number of customers etc. Secondly, since secondary data isn’t readily available in Nepal, the best alternative is to conduct hands on research. You can go into the market, talk to the existing bakeries, print out survey forms, and distribute it to your potential customers. Once you start collecting data, you will see that there are some common characteristics about your customers or common insights that other bakeries have given you. This information will help you understand the market potential, the number of competitors, and whether people are willing to pay for the product, and so on.

Figure out the value of your product

Once you know that the market that you are targeting does have potential, the next step you next step you need to take is to question whether what you are providing truly has value. In business, this is called a value proposition. Your value proposition is the solution you provide to the needs of the customer. 

One of the best tools to understand the value of your product is using a ‘value proposition canvas’. This canvas approaches value proposition as a sum of solution and problem fit, which means that you will need to understand the problems your customers are facing. You do this by observing them and asking them questions. What are the emotional drivers of purchasing your product? What are the rational drivers? What is the risk of switching to your product? What products are people currently using? All of these questions will give you a strong grasp of the problem. 

Once you understand this, your only task now is to address these problems. Perhaps no example is a better personification of this than that of Google. When Google entered the search engine market in 1998, the market seemed matured and dominated by big players who had spent millions to build their brands, such as, Yahoo, Lycos, Excite and Infoseek. However, the founders of Google knew that in front of superior product and support of the customers, brand was worth next to nothing in the search business. Google never advertised, they were like dealers who knew all about their customers and their product, and slowly grew in size; eventually sweeping away all the customers. There is nothing more valuable, in the early stages of a startup, than the users. If you listen to your very first costumers, they will tell you exactly how to make a winning product.

Develop a prototype

One of the biggest monetary pitfalls for startups is thinking that they need to address all the problems, or have many features to attract customers. This will end up costing so much, that you may well burn through everything, trying on developing the perfect product. 

The secret of running a startup cunningly is to not be a Jack-of-all-trades and master of none. Focus on being the master of a few features that will set you apart from the rest. Jeff Bezos, the founder of Amazon, started with a simple website that only helped people buy books. He created, what is known as a Minimum Viable Product (MVP), which addressed the minimum of the needs of the customers, and gave them a lot of information about their characteristics as well. This version of Amazon was just a prototype, which, by definition, is meant to be improved with each iteration and market test. Your aim must be to do the same: start with a few features that your customers want, and then slowly build up on that.

For example, if your product is an ecommerce website then you can start with a few products and ask the customers for feedback on what more they would like you to add. This way you are introducing new features or products based on the demand; which significantly reduces your chances of bearing a loss. 

If you are manufacturing a smartwatch, first create a demo video of the watch. After showing the video to your possible clientele, do a survey on how many people would be interested in the watch and what features would they like to be added or removed. This way you not only gauge the demand of your product, you already have valuable input that will help you improve it as well. Building a prototype will not only save you a lot of money but will also show you where you need to invest in product development.

A resourceful startup is cunning, cheap and has a great sense of self-improvement. It understands that the best use of its limited resources will come from understanding the market potential, assessing the value of its product, and doing a test run. If you only have a few thousand rupees to spend on your business; spend it on these. They will help pave the path forward.