How To Validate Your Business Idea

681

Stop me if you’ve heard this one

You have a “lightbulb” moment. Maybe you scribble it down – maybe not. For whatever reason, you let it slide. 

Until sometime later - when you see it being sold online for a tidy profit by someone else who didn’t merely have the same idea. They ran with it.

So why didn’t you?

Likely because – as great as your idea seemed – you felt overwhelmed by the prospect of getting it to market.

The next time inspiration strikes, don’t prevaricate.

Validate.

What’s It Worth?

You validate your business idea by answering one simple question. 

What’s its value?

You need to determine whether there’s actually a need for your product or service in your target market. 

Investing time and money in an idea that doesn’t fly can be demoralizing. But if you’re able to establish market validation, you’re more likely to secure funding support. 

Before you get too wrapped up in an idea, do a comprehensive search to see if somebody else has beat you to the punch. But even if they have - don’t give up. 

A healthy amount of competition is an indication that there’s a market for what you want to sell. There may be ways you could improve on an existing product, or offer added value to a current producer.

Whether you intend to partner or go solo, if you’re convinced that the market could be better served by your contribution – proceed.

Are They Hiring?

Ever heard of the “Jobs to be Done” theory?

It was developed by a Harvard Business School professor, who defined a “job to be done” as a problem somebody is trying to solve.

When customers make a purchase, they “hire” products and services to get jobs done – not because they’re attracted to a particular set of bells and whistles.

To set yourself up for success, be sure that your product or service is the solution for a job that needs doing.

You should be able to answer three basic questions:

  • What’s the value of my product?
  • Who is my target audience, and what do I know about their needs?
  • How can my product/service more effectively meet those needs than what’s on the market?

Will It Fly?

You want to ensure that if you build it, they will come - but you won’t know until you ask.

Sound out your target market to get a sense of your product’s potential. 

Create newsletters and communities around the problem you aim to solve. Or, become active in these communities and reach out to fellow members.

Connect with existing or potential customers. Use online tools like Google Forms or SurveyMonkey to gather information from your contacts.

Ask them about their interests, motivators, needs, and products they’re currently using. 

Their feedback may suggest your product doesn’t have strong validity. That doesn’t mean you should give up. Instead, consider using the information to improve or revise your initial offering.

Your Team’s MVP

If your idea gets positive feedback, create an MVP (minimum viable product) to determine if it’s a product consumers would really use.

This will be a prototype with just enough features to make it functional. Set up a group to test the MVP application and provide you with their insights. This will put you in a good position to accurately assess the product’s viability.

Which product features should make the first cut? The ones that most strongly affect product value.

Functions that don’t substantially influence value can be saved for subsequent updates.

For example, instead of having a separate page for feedback at startup, leave an email address for users to respond to.

Starting with the basics and implementing user feedback will allow you to progressively enrich your product’s functionality. It’ll also lower initial development costs, solidify validation, and help you reach ROI sooner.

Testing Tactics

  • To spot early adopters, create an online landing page with a full product description where those who want to try your product can leave their contact information.
  • Send out cold emails to your target audience (including retailers), introduce your MVP, and seek feedback. Some may convert to customers - while others may help you determine the gaps that need to be filled.
  • Use platforms like Shopify, eBay, or Etsy to set up an online storefront and start taking orders. It’s a surefire way to test whether consumers will really pay for what you’re selling.
  • Create a small advertising budget ($200 should do it) and advertise for target keywords that define the problem you’re solving. See if you get traction.
  • Launch a Kickstarter project. This will not only raise funding through pre-orders – it can help you start building a customer base

In the end, the outcome of these validation protocols will give you a good sense of whether or not there’s an appetite for your product or service within your target group, and whether it’s worth pursuing.

Pick Your Path

The results will tell you one of two things: either you’re ready to scale up to meet customer needs – or it’s time to file this particular idea under “not ready for prime time”

Yes, it’s difficult to walk away from an idea that you’re excited about – but it’s better to be honest with yourself sooner, rather than having to pull the plug later and watch your money and efforts go down the drain.

If you’re genuinely motivated by the entrepreneurial spirit, you won’t give up on generating ideas. 

Now you have the tools you need to assess idea validity - and eventually, you’ll hit on one that generates enough buzz and interest to build a business around. 

Do not press “Pause”.

In today’s competitive, quick-moving business environment, an idea that you validate today could already be in development or about to launch elsewhere tomorrow. The entrepreneurial victor will be the one who gets to the market first.

So when you’re confident you’ve got a winner, don’t let it slide.

Run with it.