The Entrepreneur’s Tool Kit: Validating your business
Last week, we introduced our new series, “The Entrepreneur’s Tool Kit.”
Our mission: To lay out, step by step, the challenges you face as an early-stage entrepreneur, and how you can overcome them — even without the benefit of an elite business network other entrepreneurs may enjoy.
This week, we’ll examine the first step in your journey: validating your business idea.
We’ve all heard the old adage: Build it and they will come. Your great idea is the next big thing, and customers will flock to it in droves when released. Unfortunately, it’s just not that simple.
Many great ideas have come and gone without a trace — not because they weren’t good, but because they weren’t the right idea at the right time. Consumers are searching for products and services that solve their problems. And those problems are always changing.
That’s why validation is the first step in your journey as an entrepreneur.
Validation is the process of testing the appeal of your product or service to the type of customer you hope to reach — outside of your immediate circle of friends and family. (While these personal contacts are probably the first audience for your business pitch, they likely don’t represent the total market you’re trying to serve. What’s more, their personal feelings of support for you can skew their responses — offering more encouragement and fewer challenges than your idea will require to survive in the wild.)
As serial entrepreneur Arti Arora Raman said about her current startup, Titaniam: “Initially, I leaned on my network; I need interaction with people who will take my call and listen to my idea, however stupid it might be.
“But very, very quickly thereafter. I try to cold call because if I can’t get a stranger to be interested in my idea and take a second call with me then I might be fooling myself and my friends.”
Validate before you build
Now, you may be asking, “Can I sell users on the product before I build it?” And you wouldn’t be the first to ask. The answer is … Yes, you can! In fact, receiving feedback on whether your customer would consider purchasing your product can determine whether you’re on the right path.
Validating is a lot like checking the right model tires for your car before purchasing them: The car won’t go anywhere without them.
Validation may be more or less complex depending on the product or service you’re pitching and may entail a variety of tools. These can include conducting customer surveys, creating a sales landing page, offering free samples, and checking competitors and their customer reviews. Trying multiple approaches is often the best way to refine your results.
If the feedback is positive, you can move forward with your idea — and use the data you’ve gathered to convince investors and collaborators about the soundness of your approach.
On the other hand, the feedback may be sufficiently negative that you conclude it just isn’t the right time for your idea.
In most cases, the feedback you receive through validation will be mixed. This gives you an opportunity to refine your original concept to emphasize the positives and eliminate the negatives — then validate the new version. Whichever result you get, you will be more prepared to succeed on the next step of the journey.
Next up in the Entrepreneur’s Tool Kit:
- Retaining experts in finance, development, marketing and more
- Employing blueprints for your business
- Picking your core team
- Engaging talent from universities
- Building a rapid prototype
- Engaging advisors to refine your plan
- Getting discounts through partners
- Consulting with an lawyer
- Managing equity
- Marketing yourself to the world
- Getting ready for investors
