Are You Sure Your Business Will Work?

By
Zacary Smucker-Bryan
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Plenty of food and farm businesses are awesome in theory, but then they just don’t pan out in the real world. Why? While any number of factors could be to blame, there’s often a common theme: Early on, the entrepreneur made assumptions—such as about their target customers, what needs their product or service would fulfill, or how much people would be willing to pay it—and one or more of those assumptions turned out to be wrong.
 
This happens all the time, across industries. Entrepreneurs think they have a good understanding of customer desires, shopping behaviors, market competition, or other factors, but then they find out the hard way that they don’t. They pour significant time, energy, and money into launching a business, only to discover that they’d overlooked or misjudged something critical. Even big food companies and seasoned businesspeople can fall prey to misassumptions, which means small food and farm startups are especially vulnerable.
 
So how can you avoid this fate? By actually testing and validating your assumptions early in the process. Yep, even those that seem super obvious—like “everybody knows that!”—can, and probably should, be put to the test.  
 
This is exactly what the Center for Technology Commercialization (CTC) helps early-stage entrepreneurs do. Part of the University of Wisconsin System’s Institute for Business & Entrepreneurship (IBE), CTC guides startups in methodical, disciplined assumption testing. This essentially follows the scientific method: make a hypothesis, develop an experiment to test it, run the experiment, repeat the experiment, gather data, synthesize the data, and make a conclusion.
 
As CTC director Ibella Yamben, Ph.D., shares in the latest Edible-Alpha® podcast, the organization works with all kinds of startups and develops experiments in an industry- and market-agnostic way. But CTC will also team up with FFI, also part of IBE, to expand the toolbox and tailor its guidance to the food and farm sectors.
 
Dovetailing with the Lean Startup model, the assumption testing often centers around customer discovery. This involves querying potential customers, really listening to what they say, and then validating what an entrepreneur thinks they heard them say. “The intention of the experiment is to assess something about human behavior that impacts an element of your business model,” Idella says. “Hopefully, you can get an evaluation of something around cost, revenue, or value proposition.”
 
Customer discovery work is difficult—but doable, especially with the right guidance. It requires a very disciplined approach, asking open-ended non-leading questions, and having a very tuned-in ear. Then in the experimental phase, whether through focus groups or other market testing, entrepreneurs must remain neutral, keep their biases and desires in check, and understand that the results may not match their original hypothesis. They should take the same discipline in synthesizing the information and making conclusions.
 
And if the results of an experiment don’t align with the original theory, that’s OK. Sometimes this process proves that a business idea is a non-starter. Or, more commonly, it reveals new opportunities or slightly different directions to take. Whatever the findings, doing this work in the beginning stages of a startup can only strengthen its odds of long-term success.

Though it might not sound like it based on its name, the Wisconsin Center for Technology Commercialization has a whole lot to offer food and farm entrepreneurs. Through Ideadvance, SBIR/STTR programming, and other key services, CTC helps startups identify research opportunities to inform commercialization, develop and conduct experiments, and access funding to do this work. Director Idella Yamben, Ph.D., stops by the podcast to discuss the importance of assumption testing and the many ways CTC can help young food and farm businesses start on the right path.

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