A question from Adil on YouTube:
I’m looking to do some freelancing in web development and possibly turning this into a full-time thing, so your videos really do help.
I speak fluent English, but I have relatives in Switzerland and I think the potential to focus my efforts there could be very rewarding. The only issue is the language barrier ( French + German ) but I have a retired uncle who’s willing to help out on that. Since I live in Africa, even earning $2,000 a month would be quite enough to live comfortably and since everything’s so expensive in Swiss, I’m thinking I could be able to charge clients more if I was able to get enough work there.
He’s basically asking here if he should target clients in Switzerland for his freelance web development business.
And I replied:
Hard to know if it’s a good idea or not without trying it. I’d recommend looking up “Riskiest Assumption Test” and use that approach to quickly figure out if it’s worth pursuing or not.
So let’s talk about Riskiest Assumption Testing and how to use it, because it’s a tool that can save you from wasting a lot of time and energy when building your online business.
Here’s the plan:
- First, I’ll give you an example of Riskiest Assumption Testing (or RAT for short)
- And then we’ll dive a bit more into the theory.
Sound good?
Alright then…
Riskiest Assumption Testing – Irish Pubs Example
A few years ago I was living in Berlin in Germany for a bit when I had the best idea ever.
I realized that a great niche for my web design business would be… Irish Pubs!
Think about it:
- I’m Irish
- I’ve been a web developer for many years
- Irish pubs are everywhere
- And Irish pub websites are generally pretty crap
I mean, clearly, my idea was a winner, and I was going to be super rich.
But here’s the thing about ideas:
You never really know if an idea is good or not, until you actually test it out in the real world.
So the first thing I did when I had my brilliant idea was sit down and list out all the assumptions I was making.
And the biggest, riskiest assumption I was making, clearly, was that Irish pub owners would be willing to pay someone to build them a better website.
- If that assumption was true, then brilliant, I’d be off to the races.
- But if that assumption was false, then my idea wasn’t worth anything.
The next step then, after identifying that riskiest assumption, was to test it.
And it dawned on me that the quickest way to test whether or not Irish pub owners would be willing to pay someone to build them a better website… was to go and ask them.
So that’s what I did.
I hopped on my bicycle and cycled around to all the Irish pubs in Berlin and I spoke with the owners, and those conversations went a little like this:
- Hey Mr. Irish Pub Owner, would you like a new website?
- Ah no, we’re grand thanks.
Yeah, wasn’t a great response 🙁
I could probably have been more persuasive and done a better job selling them all on the idea of having a new website, but you see it’s kinda difficult to sell a solution to a problem people don’t even believe they have.
So after speaking to a whole bunch of Irish Pub owners in Berlin and not getting a good response from any of them… I decided that my brilliant business idea wasn’t so brilliant after all, and I dropped it.
That, right there, is Riskiest Assumption Testing
And it’s a great tool because it took me only a couple of days and several conversations to figure out that my idea wasn’t going to work and that it wasn’t worth pursuing any further.
Now compare that with an alternative way to test a business idea, and that is…
Building a Minimum Viable Product (MVP)
If I had taken the MVP approach, what would I have done?
I probably would have built a showcase Irish Pub website, or maybe even some kind of basic CMS platform that Irish pub owners could use to quickly build and host their own websites.
And then I would have tried to drive traffic to a landing page and spent months creating articles and guides to help Irish Pub owners develop a better web presence… hoping that eventually, a load of them would want to hire me to do it for them.
I could have spent several months doing all of that… and eventually reached the same conclusion: that my idea wasn’t going to work.
Now that’s not to say that there isn’t a time and a place for building a Minimum Viable Product, because there absolutely is. But I would encourage you to give Riskiest Assumption Testing a try before you go the MVP route, because it can save you a lot of time and energy.
Steps for Riskiest Assumption Testing
- Come up with your idea.
- List out all the things that would have to be true for that idea to succeed (i.e. your big assumptions).
- Pick out the riskiest assumption from that list (i.e. the BIG assumption that everything else depends on).
- Figure out the fastest/easiest/cheapest way to test that assumption.
- Actually go and test it.
If the test fails, you move on to another idea, so back to step 1.
And if the test passes, then you cycle back to step 3 and pick the next biggest, riskiest assumption, and go ahead and test that one next.
That’s pretty much it.
“Should I target clients in Switzerland for my freelance web development business?”
Coming back to Adil’s question… he was asking if Switzerland would be a good target market for his freelance web development business.
How would we use Riskiest Assumption Testing to figure that out?
Well, the riskiest assumption there is similar to the one I was making with my Irish Pubs idea: that my target market would actually be interested in the service I wanted to offer.
Now Adil mentioned that he’s living in Africa, so he’d need a way to test his idea remotely.
What I’d suggest is finding online groups for Swiss business people and entrepreneurs, making an offer to members of those groups, and seeing how they respond.
And I’ll share with you a great example of this approach that I once saw in a Facebook group called The Cult of Copy.
A lady named Lauren Raye Gordon, who was new in the group – she’d only joined the day before, despite her claim there that “lots of you already know me” – posted this offer for her copywriting services:
And as you can see here in the comments, within 24 hours or so, she already had 3 people interested:
Now I don’t know Lauren’s story, but given that she was new to the group I suspect she was doing her own little Riskiest Assumption Test there to see if there was a market for her copywriting services.
If she had gotten no responses to that post, I imagine she would have moved on to testing with another audience, and perhaps with a different offer.
So Adil, if you’re reading, I’d recommend finding some Swiss business groups on Facebook and LinkedIn and emulating Lauren’s approach to see if there’s any interest there for your web development services. 1
What’s Your Business Idea?
Go ahead and share in the comments below if you’d like some feedback or some suggestions for how you can use Riskiest Assumption Testing to validate it.
I always learn something new in your weekly newsletter.
Thank you for sharing your knowledge and experience.
Thanks for reading, Fred!
Hi Niall,
Very valuable piece of advice indeed.
I would like to add a few points from my experience, it might save a lot of people their invaluable time and money. Firstly,a new entrepreneur should choose a business with high barriers of entry,otherwise he would be copied, finished in no time. That takes you to technical products, services, as it took me to. Now,the assumption testing here is mire complicated than Irish Pubs case. So, you would have to go for MVP, which was what I did. Only,it took me an year and $US20,000 to prove to myself that it would not be viable! Next was another idea which had actually been piloted by a friend and proven successful. So,I joined him to take it to the skies. Well, this time it took me $US30,000 to conclude that the business wouldn’t scale to my expectations (that could be another problem if partner and you were earning well in big corporations)!
So, here I am burned and beaten, yet in one piece reading Niall! Despite the wishes, even meticulous planning business world is a minefield. Prepare to get hit, even badly. Rise up, you would have burnt tour money,but you would have chased your dream. That is what matters in this world of risky variables. May be you would hit jackpot with the next big idea, if you have it in you what it takes. Afterall, you are now battle scarred and wiser after several battles of the mind and materials.
Hey Haridas,
Thanks for sharing your experience.
I disagree with that. Choosing a business with a high barrier of entry means it’s harder for others to copy you, but it’s also harder for you to succeed. Lower barrier, more chance you’ll succeed. It’s always a trade-off.
Ideally you’d find a sweet spot: a business opportunity with a high barrier to entry but you already have some hard-to-acquire insight/expertise/resources that gives you an unfair advantage in pursuing it.
That said, I’d still advise entrepreneurs NOT to focus on such difficult/expensive business ideas when they’re just starting out. Better to cut your teeth on smaller projects, gain some experience, fail small so it doesn’t cripple you financially and deter you from trying again.
Kind of like riding a bike: you don’t put a kid on a Harley first time out and say, “Hey, if he can survive that, he’ll be unstoppable.” No, you’d start him off on a bicycle with training wheels, then a regular bicycle, and maybe later put him on something with a small engine, etc.
I heard from a brand new entrepreneur recently who’s trying to build a site like Upwork. He’s never built anything before. Even if his idea is a good one, the odds of him succeeding are minuscule. I reckon he’d be better off becoming a freelance developer (low barrier to entry) and gradually taking on bigger and bigger client projects. 5 years from now, his level of skill and judgment would be much further along and he’d have a far greater (though still tiny) chance of building a successful site like Upwork.