The issue here is to understand, from the customer side, what are the parameters of an acceptable solution and, from the technology side, whether these parameters can be satisfied with whatever technology is available. The following questions should allow the entrepreneur to address these issues.
- Parameters: The valuation process applies to a wide variety of needs and possible customers. In each case, the nature of the problem, the customer and the environment determine a set of characteristics of an acceptable solution. These can be things like cost, function, efficacy, size, usability, performance, style, etc. What are the important parameters that must be satisfied for a solution to the need/problem you identified to be acceptable to the potential customers?
- Proposed solution: What is the solution that you propose to deliver to customers? Your description does not have to be detailed in all areas, but should attempt to be complete, that is, include all important elements of the solution.
- Technology: Are there any new or unproven technologies involved in your solution?
- Science: Is there new or unproven science involved in your solution?
- Feasibility: What is the evidence that your proposed solution can be delivered within the parameters given? What are the major unknowns; what questions need to be answered before feasibility can be established?
- Production/scalability: Does this company require production at high volume? Can you produce reliably and profitably at high volume? Can you produce at positive gross margin at low volumes? Will overhead remain relatively flat as volume grows?
- Prototype: A prototype is a vehicle for demonstrating and testing the proposed solution. What prototype would you propose for your solution? Outline a plan to build this prototype. How long would this take and how much would it cost?