Ideas. There are millions of ideas generated at any one moment in time. Creating ideas can be an exciting process that transports us into places we only dream of with the endless possibilities that they may bring. When it comes to a business idea, you’ll need a reality check as you ask ourselves: Is this idea good or bad?
Not all ideas are good ideas and not all good ideas are profitable. There’s nothing than casting an idea into the world with the best intentions, spending time and money to build it up only to find out that there is no demand for it. Or, to find out everyone thinks it’s a great idea but it’s not something they are willing to pay for.
There's no shortage of ideas that should have succeeded but didn't. Google Glass, for instance? The idea sounds cool and might have some likely applications in real life but with its launch, we find out that the world is not ready for it yet.
Considering 9 out of 10 startups fail because they can’t find market fit, idea validation is essential. Unless you have limitless amounts of resources and don't mind spending years of your time on a pipedream, this is your best chance at creating something that is truly memorable that your customers are dying to pay for. In this article, we will discuss how you can research and test ideas for your product, service, or business model.
Before starting a business, create a concept based on the market need and the target audience's willingness to pay. Establishing this early on helps you find the demand of the market and can better position you to provide a winning solution. That's how idea validation works.
Some founders prefer to skip the process of clarifying if their potential customers want to buy a product and don’t spend time on that. As a result, they fail to learn the cause of their eventual failure. No connection with real people makes their startup a then-and-there money pit that goes nowhere. To avoid this, learn early and fail fast.
Validation involves testing and that can come from a host of data gathering method including desk research, customer interviews and landing pages.
Product validation lets you understand the market situation while making sure you are not starting a meaningless and needless product that nobody wants.
The most important reason to validate your ideas today is to become productive at an relatively early stage, before you invest too many resources. The earlier you are able to get your ideas validated, the less time, money, and effort you need to invest in them. The key here is to clear up all uncertainties and assumptions to make way for actual data. Doing this early on can help you iterate your idea so that it can be consistently updated and improved upon.
Another reason is to create a real value-generating product. You do not have to be the new Steve Jobs, but anyone in the path of entrepreneurship should have the desire to make the world a better place. Not just to create another crappy consumer product to clutter the world for the sake of fame and fortune.
You can also validate your idea on as a way to mitigate risk. Testing cheap and fast like a startup should is the best way to ensure that there are early adopters that will be willing to use your product. Your best supporters are the ones that are willing to put their money where their mouth is. Getting these early customers through the door is a great first step to building a profitable and sustainable business.
Before even starting the validation process, ensure you have these 3 key ingredients. Having them written down for now doesn’t mean that they’re set in stone. Everything is flexible here but having them ready before validating your idea helps you focus on the solution you want to provide:
Define your problem – Identify this early on. There’s a big difference is a business solution that is nice to have and must have and this affects the demand you can generate later on. Have a pool of problems you want to solve by providing a solution that is better or different.
Define your customers – These are the people that are affected by the problem you defined. Narrow down your buyer persona with as much information as you can. Use a buyer persona template like this to map out your ideal customer to get a better handle of who you’ll be approaching when you want to validate your idea.
Define your solution – Here’s where you can come up with your initial idea. What is it and how can it solve the problem for your customers? Is it a different way of doing things? Is it a better way? Is it a solution implemented in other industries that you think can work in the one you’re interested in?
Set your validation goals. These are actual benchmarking metrics you’ll be using to decide whether your idea is viable or not. Use measurable, defined objectives for your goals:
- 10 interested prospects that are willing to try the solution
- 6 successful pitches to companies that want to follow your progress
- 2 pre-registrations to your MVP
You can use something like the lean canvas to figure out what your idea is all about. At this stage, you’ll be using a set of hypotheses on your idea. These are all assumptions based off whatever information you have right now. We’ve written an article on how to use the lean canvas here.
Now that you’ve gotten all the basics down, it’s time to go out there and validate your idea. There are various ways to do this and we’ll name a couple of them here:
This is the first step. Sit down in from of your computer and start doing your research. Think your idea is unique? Search for it on your favorite search engine. The best to use so far is definitely Google. Go a little deeper and search for services and products in the same niche on social media. Lookup companies on Crunchbase or Pitchbook. Look everywhere you can and read up on news articles to see if there are any new and emerging startups doing the same thing. Jump on forums like Reddit to find out if there are relevant business questions or topics that reflect an interest in your solution or the same concerns raised on this problem. Quora can also be a great resource to find questions or answers from the industry.
Start reaching out to potential customers. Your goal here isn’t to pitch your product. You’re too early in the game to sell anything. What you’re doing here is fact finding. Collect objective feedback on the problems your customers are facing and how they’re solving it. Don’t ask leading questions or questions with “what-ifs”. Instead, find out if they’re currently facing the problems you want to solve and what they’re doing to solve them right now. If they never even considered it or aren’t really bothered by your problem, that might be a red flag that your problem isn’t a big enough one that needs solving.
Where do you find potential customers to talk to? Look them up on Linkedin or Quora. There are also other specific forums for different industries. People tend to gather where peers hang out. That’s where you can fish for information.
How do you collect information? Schedule a quick call with them or send them a quick survey. You can build one on Google Forms or TypeForm. The goal is to find information quickly and conveniently. Don’t bog them down with a 20-page questionnaire. Nobody will answer them for you.
By the time you get here, you already know that there’s a gap in the market that needs to be filled. At this point, you should have a better understanding of the market and can start looking deeper into your solution.
A basic Proof of Concept (POC) should be designed to validate whether your technology can even be implemented. This comes down to the technical aspect of your solution and how you plan to deploy it. Find the easiest way to test your idea out. For example when you’re working on an app, you can design the interface and wireframe easily with pen and paper or by using digital prototyping software like Balsamiq. You can also try using explainer videos to gather feedback on your idea.
You can start gathering even more information and interest through the use of a landing page. Add in all the information you can on your product so that you can start collecting emails and pre-registration.
When you’re far along enough, you can start giving early access or enable beta testing. The key here is to always be receptive to the data you’ve collected and to adjust according to the feedback you receive.
Although ideas can be valuable, they are often risky without validation, especially when you want to go all in very quickly. Being married to an idea and thinking it’s a sure-win without any actual evidence to back it up may cause heartaches, wasted resources and possibly even broken relationships. The cost of running with a business idea blindly is too high.
That’s why this is an effective way to mitigate risks and reduce the development costs of your MVP. Doing different types of research will allow you to determine the potential of your idea, helping you chart your course to success. If you’re looking for resources to help you with your planning and execution of your startup, take a look at Mad Creative Beanstalk’s free resources section to get all the templates you’ll need to get started.