How to validate your business idea?
Ideas are everywhere. From the idea of going to the moon or building software operated electronic cars; humans have always delivered some great innovations. But, when it comes to monetizing ideas or building a business out of it, many calculations go wrong! Let’s discuss how you can validate your business idea before start building your final product.
At this point, you might think that why do I need to validate my business idea? It is unique, my friends said that you should go for it and even there is no similar product available in the market; but, that does not mean that you should instantly go ahead and end up investing a load of money into an idea that does not have any product-market fit. Let’s start with how part!
Goals and Assumptions
With the idea in your mind, one has to make sure that it comes with an end date or goals to achieve. Goals are a necessity for any idea. With goals and assumptions, one would be able to get a deadline and launch readiness.
In case of assumptions, assumptions have to be made on basis of your previous experience and market you are going to target with your next idea. For example, the market’s sensitivity to different things happening around them, government policies and help are some of the things one needs to make sure to calculate.
If there is a competition existing in the market, you would know which marketing channel works the best for you or how your conversations would be in the real market. But, if you are the first player in the market, you have to assume those things.
Will you go for offline marketing or paid online marketing? How would you generate sales; through agents or automated online platforms? What would be your conversion rate for each marketing efforts and so on.
Market size
Market size plays a big role in bringing your idea to market. There are two types of markets you can select for your product or service idea.
- Bigger market with cheaper products or services
- Smaller market with exclusive products or services
Your product or service has to develop the market and get some sort of returns our of it. Thus the selection of your market and market size plays an important role.
The market size can also be predicted with the trends going on in the market. For example, if your audience is sensitive to purchasing your products when there is a festival or holiday season or if they would use it on general occasions; the numbers would vary a lot.
Choosing a market and making a rough estimate of market size is important, as it will help you to identify the market penetration technique you are going to use when the product is ready to launch in the market.
Competition check and Market share analysis
There is almost no idea left in this market, where there is no competition! Most of the new, old or existing businesses would have to face competition in the market at any time.
With this analysis, you would be able to make sure that your startup has to follow the blue ocean strategy or the red ocean strategy to gain market share or to build the market on your own. Competition is always good for any business, as it gives you a good view that there is a need of your product in the market and you just have to make some changes to get your market share.
Actual need in the market
While every idea is excellent, the actual need in the market is the test you need to do before going ahead. Find customers and do test your idea with them.
To do that, you would need to go out and take real customer interviews. This interview can include basic questionnaire like why do you need something or is there any need for your next idea in their lives or not. Other than that, knowing customer pain points and issues would give you an added advantage versus going into the market without having any kind of background information.
For the customer tests, do not go with your friends and family. At the end of the day, they would have a soft corner towards you. Go with real customers and try to refine your idea to its core. That is the only way you can improve your final idea.
Testing the MVP
Once all the steps are done and you know that now your idea is making sense and you are ready to go in the market with your new business idea, product idea or service idea. But, developing a product with all the bells and whistle would require a lot of time and money investment. Which, does not make a lot of sense to go all in, as a new idea might fail when it actually hit the market.
Read more about MVP: Why do you need a minimum viable product?
Thus, developing a minimum viable product makes more sense when you are hitting the market for the first time. This way, your base idea will hit your initial customers and you would be able to collect a lot of feedback from them before adding more and more features until it becomes successful.
So, these were the five major steps you need to execute before launching your new product in the market. If you have an idea on any product which involved complex technological help, let’s connect to bring a solution to masses!
