Should a New Business Idea Be Kept Secret?

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by on February 9, 2012

Many entrepreneurs wonder whether to keep a new idea a secret, as they develop a new business or product, and begin  discovering effective marketing strategies for it. The number one reason that small businesses fail is not because of a lack of good ideas, it is because they run out of capital before delivering a product or service that customers crave. To forage a more direct path, focus on your market and learn what and why customers will buy.

While starting one of my businesses, a fundamental error was keeping the product a secret, so it would not be mimicked by competitors. Too much time was spent perfecting the product and its options that were suppose to attract more customers. Our efforts were spread thin while not understanding the salient features and core design that turns customers into fans. The outcome was lost time and bloated expenses.

According to Chris Dixon, entrepreneur and investor:

A frequent question entrepreneurs have when they are just starting their company is: how secretive should I be about my idea? My answer: you should talk about it to almost anyone who will listen. This includes investors, entrepreneurs, people who work in similar areas, friends, people on the street, the bartender, etc.

There are lots of benefits to talking to people. You’ll get suggestions for improvements. You’ll discover flaws and hopefully correct them. You’ll learn a lot more about the sector/industry. You’ll learn about competitive products that exist or are being built. You’ll gauge people’s excitement level for the product and for various features. You’ll refine your sales and investor pitch. You might even discover your idea is a bad idea and save yourself years of hitting your head against the wall.

Perfect versus Perfecting

Your business or its offerings will never be perfect, and that is part of the fun – there are always new challenges. Rather than waiting until you have a perfect product or service, commit to a process of improving it. Get your initial product in front of prospective customers as soon as possible, even if it is not refined. Consider the reactions of others, but use your intuition to elaborate upon it.

Now versus Later

Time is money. To flourish, value your time and use it wisely. Remember, success in business is not one thing 1,000% better; it is 1,000 things 1% better. Do not fall in love or rely heavily on one way of collecting feedback or marketing intelligence, be objective and measure the results from different people and perspectives.

Soliciting customer reactions now, rather than later, may expose your idea sooner than you like to competitors, however, entrepreneur Chris Dixon thinks the risk is worth the gain:

The handful of people in the world who might copy your idea are entrepreneurs just starting up with a very similar idea. You can probably just explicitly avoid these people, although by talking to lots of people your ideas will likely seep through to them.

Even if your idea gets in the wrong hands, they will probably just get the high level “elevator pitch” which isn’t worth much anyways. Hopefully by that time you’ve developed the idea much further and in much greater detail – by talking to as many people as possible.

Be Intrepid

Letting fearful thoughts drive action is a waste, since entrepreneurs are more often blinded by the unanticipated. If your product offers value to customers, advance with confidence. Do not procrastinate. Effective marketing includes starting now.

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