How to validate your Business Ideas
For most aspiring entrepreneurs, there is nothing more gratifying than that aha moment, when you discover that idea or solution that ‘can change the world’
But can it though?
The only way to truly answer that question is by validating your idea. If you can prove that your idea has worth beyond the bar napkin or sticky notes on which it is scribbled — the process gets much easier. By going through the process of validating your business idea, you can gain a deeper understanding of how your product does or doesn’t meet your target customers’ pain points.
The insights you gain can help you create an offering that not only addresses your market segment’s needs but shows potential investors that you can attract paying customers. In other words your business is viable.
Now that we have gotten your attention with the why, let’s move to the the how, by looking at the process of validation through three key steps
Articulating the goals, assumptions and hypotheses for your business is the very first step in idea validation.
Start by asking yourself:
- What’s the value of my idea?
- Does something like this already exist?
- If it does, what makes my solution different?
- Who, do I intend it for and what premises can I or have I made about them?
This process will ultimately help you communicate the value and differentiating factors of your product, and illuminate assumptions and hypotheses you’ve made that are yet to be tested and verified.
Rating your idea
A great hack to find the value of an idea is to use a weighted scale. For example: (on a scale of 1 to 10, with 10 being the best possible score)
- Investment Cost i.e the amount of capital it would take to build and launch the product/service.
- Personal Interest i.e how optimistic and passionate you are about the prospects of this idea.
- Potential Profit i.e how profitable the idea could be after launch.
It asks several important questions, such as:
- Is there a market for the product as a result of your business idea?
- If there is a market, is it big enough?
- Are there people who are looking for the solution to the problem your product will solve?
- Are they willing to pay for such a solution?
Answering these questions can also help narrow what segments to target and determine where your product fits into the market and assess how much of it your business could own.
Research Search Volume of Related Terms
Another way to gauge market validity is to research the search volume of terms related to your product or mission. When consumers need a product or service, they often use a search engine to see what the market has to offer. Services such as Moz and can help indicate a demand for the product
This may include hiring a market research company to conduct focus groups, sending out an online survey, or having a conversation with someone within your network and asking questions like:
- Would you use this service or product and how often?What do you like about current products or services currently on the market?
- What do you dislike about current products or services currently on the market?
- What concerns/questions would you have about this service or product?
- How much would you pay for this service or product?
The answers to these questions should help you uncover your ideal customers’ jobs to be done and gain a deeper understanding of their purchasing behaviour. Organising your efforts around this core job to be done will allow your team to develop innovative product offerings and position your business for continued growth.