From Paper to Reality: How to Validate Your Business Idea
When you have an idea for a new business, everything may seem perfect and great at first, especially when the project is just a sketch drafted on a napkin or on a piece of paper. Yet, when the time comes to realizing your plans, it is inevitable that you will have to deal with harsher realities. This is not to say that you should be less optimistic or ambitious, but that you have to be aware that your startup idea needs to be validated every step of the way.
What is validation?
But what does validation that mean, exactly? Validation is a process during which a product or service is tested, and both the possible attitudes of potential customers towards it and the behavior that they would express through it are analyzed. Consequently, by way of market research, validation is aimed toward identifying the best way to go about improving a business idea. Moreover, validation is essential to establish whether a business project should actually be pursued in the first place.
Keep in mind that, as the best growth hackers of our time have shown, market research plays a major role not only in selling a product but also in the design process. In other words, if you want to be a successful entrepreneur, you must design and build your business and products around the needs of your potential customers!
So, how can you know if your startup idea is a good starting point? How can you improve it to meet the true needs of your potential customers? How can you identify the true needs of your potential customers to begin with?
5 useful tips that help you transform your sketch into a feasible reality
1. Are you sure that a (very) similar product does not exist already?
There is only one way to find the answer: market research. As a first step, start off with a few simple Google searches. Be aware that your initial idea will hardly be truly innovative, so don’t be shocked if you find more than one product/service that is rather similar to yours. However, this does not mean you should give up already, because you can learn a lot from your market competitors through benchmarking!
What are your competitors’ weak points? In which ways can their product/service be improved? Would you be the one who can do it better? Only with concrete answers to these questions you can progress.
2. Be concrete: draft a business plan
Let’s assume for the moment that your product will become popular and that you will be able to get a certain number of customers… Will this enable you to earn enough to make a profit? Do you consider the potential profit enough for you to live off of, or will you need to keep earning on the side too?
There is only one way to get a clear picture of this: drafting a business plan that includes a comprehensive, yet concise financial plan (click here for some useful tips on drafting a business plan). In this, do your research and make your calculations to estimate how much money you need to invest and what earnings you can realistically get.
3. Look for honest and practical feedback
The most practical way to understand if your product can be attractive to potential customers is to ask for feedback. Thus, start with what you have already: ask for sincere opinions from relatives, friends, and people who you really trust. Do they consider your product useful? How much would they pay for your product? If you have already made a business plan (see point 2), you can also ask for expert feedback. Pitch your project at startup hubs or coworking spaces, and, above all see if you can apply for your own Angel. If investors find your project worth of their money, they will be the first to give you the suggestions that will help you improve your idea!
4. Experiment and track the behavior of potential customers with an MVP
Build a Minimum Viable Product (MVP), a simplified version of your product that contains only the most important features, namely those that are essential to be attractive to your potential customers. Share your MVP (you should probably do this for free or even offer a future discount/benefit in return), and use it to collect data about the attitudes and behavior of your first users. This way, you will be able to collect the invaluable information that you can improve and shape your product with.
5. Work on developing your business attitude
As a matter of a fact, you have to realize that there is always something to learn, even from your mistakes or striking failures. Furthermore, even if you achieve success, there will still be the need to improve your product and expand your consumer base. So, adopt a growth hacking mindset and try to see problems and setbacks as new challenges that you can confront and learn from.
Keep in mind, though, that this won’t always be easy and that you’ll often get emotional in the process. However, don’t worry about that either, because it’s all part of the game and having an emotional response tells you that you care. It is when you experience no emotional responses anymore that you should be really worried, because that is a serious indication that you’re losing ambition to go on with your project.