Entrepreneurs are eternal optimists who tend to be ‘jack of all trades, masters of none', as they try to manage numerous tasks themselves with meagre resources. Many thrive in the startup arena, as they have to cover numerous bases to move their businesses forward, and the role diversity is appealing. However, ‘completing tasks' can often mask deficiencies in the underlying business model , as prioritisation goes out the window and focus is weak. The lack of focus means that the more difficult areas are often parked. Why do I need to get out of the office to meet real customers and find out their needs, when I can be building a beautiful looking website?  Entrepreneurs should be very focused on a small number of activities that directly support their ability to generate cash.

As someone used to dealing with entrepreneurs through the course of my work, there is one major ‘blind spot' for many of those that I meet, and it should be at the top of most entrepreneurs lists (particularly those looking to raise finance). It relates to what I call ‘demonstrating evidence of demand'. Providing real evidence that there is a demand for your product or service,  is one of the most important signals entrepreneurs can use to convey to all that there is a market for what they are doing. Many entrepreneurs chose not to address this (perhaps in fear they won't find any evidence, more so than ignorance).

In theory, demonstrating there is clear evidence you can point to, that there will be a demand for your product or service is easy. There is in effect a hierarchy with sales sitting right at the top. Clearly if people are buying what you offer they are sending a strong signal that they value what you offer. The more people that are doing so the better the evidence (I am assuming the demand is being served profitably!).

If you have not yet got your product to market there are numerous proxies that you can use to indicate that there is indeed a viable market for what you offer. Competition is one clear sign, as competitive industries suggest an attractive market opportunity may exist. If it is not easy for you to identify some competitors, it may be that the market you have identified is simply not viable (of course another plausible reason may be that you may be the first to identify it).

The nature and number of inquiries you receive is another good sign, where people have asked you for a product / service that does not exist / or you are yet unable to supply. Again this is a clear signal that people are interested in what you can offer. Using the Internet is another useful means to assess demand - searching on the main keywords related to your offering will enable you to assess the landscape i.e. are their Pay Per Click (PPC) adverts displaying on Google? If there are, it suggests others see value in the search term and are spending marketing $ trying to attract those searching on the terms. Again if there are no PPC adverts displaying for the top keywords for your business it may be evidence of weak demand (or that the market calls the offering by another name).

If you cannot find evidence using the methods outlined above it may be that you are a true visionary in the Steve Jobs mould building products that create new markets i.e. iPhone, iPad etc.  However it is more likely you may be closer to Kevin Costner the lead actor in ‘Field of Dreams' who built a baseball park in his front garden in response to a voice. The lack of a clear market and weak demand is usually a clear signal that your energies may be better focused elsewhere.

In summary, while it is tempting for entrepreneurs to run with an idea they have, and spend countless resources in building mode, it is a very high risk strategy to adopt.  It is very important to establish upfront the level of likely demand for the product or service using whatever means you have at your disposal. If no direct evidence is available, using proxies or seeking evidence of demand for close substitutes is a good alternative. If after this research you are not finding the necessary evidence, the risk profile of the venture has lengthened considerably and it is best to talk to some more prospective customers to ensure you are producing something enough people will value for you to create a sustainable business.

Alan Gleeson, General Manager of Palo Alto software

Twitter : @alangleeson