How to validate a business idea
Never start a company without first challenging and validating ideas and concepts as not validating might cost you a lot of money and wasted time. In this article learn more about idea validation, why is it important, how can you use a proof of concept (POC) checklist to validate your idea, and which are some of the methods and tactics you can use to validate an idea.
What is idea validation?
Idea validation is a process of validating product or business ideas and concepts. Both corporate intrapreneurs and entrepreneurs with an idea to start a company can use idea validation as a process to test and validate the product idea or concept.
The sooner you start with idea validation, the fewer problems will occur later on.
Never create a full-fledged product if you do not know whether users love to use it or if you are not certain which challenges wait for you on the market. Use idea validation in the phase when your ideas are still on the paper and you still haven’t spent any money developing the product.
Sometimes, you will get so many findings through idea validation that you will instantly know you can build a startup from the concept, while in some cases, you might even find out that your concept wouldn’t be successful on the market or that users do not like it.
Startup idea validation is used as a bullet-proof method that makes sure to test and validate if an idea or concept is interesting to the target audience or if the idea could be successful on the market.
Idea validation in a startup environment offers many methods to test out assumptions about the target audience or the market. It’s especially useful if you are entering a new market or targeting a niche target audience with which you do not have enough experience.
Why is it important to validate a business idea?
The idea validation process is used to test your ideas and assumptions about the solution to the customer’s problem. It is important to validate a business idea to learn more about the target audience, real problems users are facing, and the market, such as:
1. Does the target audience like the concept/product?
2. Is the product valuable to the target audience?
3. What don’t they like about the concept/product?
4. Would they be willing to use the concept/product?
5. Are they willing to pay the amount of money we would like them to pay for the product?
6. Are there any challenges with different target audiences (such as different needs and wishes on the demand/supply side etc.)?
7. What’s the situation on the market, who are the main players, is it easy or difficult to enter the market and get traction, etc.?
Test and validate your concepts before heading into development since creating a full-fledged product, with many features, is expensive and takes a lot of time.
Start small, get the data, iterate and test a lot to limit the risk of investing too much time or money into something that no one will use or want.
The most successful companies in the world use the lean startup method when building a new business, where the focus is put on testing and iterating while developing based on findings from collected data points and different research techniques.
If you’re a perfectionist in life, you will have a hard time creating a startup. If you are trying to create a startup, test, validate, be ready to kill/iterate features, and pivot everything if necessary. You can work on perfection if your product gets traction and succeeds on the market, even though I wouldn’t recommend using that method in business at all.
Most startups fail due to over-developed products that nobody wants to use.
What do you need before starting your idea validation?
Before you start with idea validation, you have to write down your idea and challenge it. To challenge the idea, try to use one of the idea validation frameworks or proof of concept checklists so that you do not forget to check and challenge anything that might be important for your concept or idea.
At M&M, we use a proof of concept (POC) checklist to challenge ideas and prepare concept validation campaigns. POC checklist is one of the idea validation frameworks you can use to make sure you research and define everything important for the success of your concept, from the target audience, market potential, USP framing to technical feasibility, etc. Here is a complete list of what you have to check, research and define before you start with idea validation:
1. Idea definition
-> identify problems worth solving or opportunities in growing markets
2. Target audience
-> research your target audience and define who has the most value out of your product, if unsure about the target audience, use customer validation testing
3. Competitor landscape
-> research possible competitors and understand who is who on the market
4. USP framing
-> define what makes your idea different and better than the rest
5. Market potential
-> understand how big the possible market is in volume and what is the growth trend
6. Testing hypotheses
-> write down your assumptions about what will work on the market
7. Product/service feature definition 8. First product drafting 9. Basic technology feasibility
-> check if your idea is easily created or are there any challenges waiting for you in the development phase
10. Business & monetization model
-> think about different business and monetization models you can use, if unsure, you can always run a business model validation and test which model works the best
If you cannot complete the checklist or you are stuck at a bullet, the concept or the idea is not clear enough.
Once you complete the entire checklist and you determine you have a valid solution for a real problem, you are ready for proof of concept validation. The goal in the validation phase is to generate enough data and user feedback to validate or discard the set testing hypotheses.
In some instances, you might validate 2 out of 4 set hypotheses and determine, through user research, that the 3rd set hypothesis wasn’t validated but that it might work through a bit different concept or model. Through the process of idea validation, your idea or concept can even improve or you might get even better ideas based on the collected feedback and data.
Get access to the proof of concept (POC) checklist
If you are currently working on a startup or just have an idea worth exploring, subscribe to our newsletter and get access to the POC checklist template in Notion you can copy and use for your own idea validations.
How do you validate your product ideas?
There are many different techniques and methods you could use to set up idea validation tests. Tests should always be set up in a way that you can learn if your assumptions/hypotheses are true or not.
Before starting with the idea validation tests, set clear goals for what you would like to get with the validation and define the main KPIs that will help you out in the process of analyzing results.
Once you have set your goals and defined KPIs, think of different approaches you could test your assumptions and get feedback about your product.
Here are a couple of example approaches you could use to validate your business ideas:
1. Condemning user interviews made out of a known pool of people (network/clients/users etc.) about the product/service
2. Creating a lead-gen landing page followed by an automated email marketing/sales process with a focus on the analysis of qualitative data and user research (surveys/interviews)
3. Testing different versions of landing pages through collecting qualitative and quantitative user data
4. Creating a no-code product prototype (MVP) and collecting qualitative data to gather feedback
5. Creating a dummy prototype that users could test through a user interview
6. Conducting landing page A/B tests with different pricing models
7. Identifying and inviting relevant target users through direct mailing or Linkedin for a user interview or for a call about the product
8. Using user research tools to get general user feedback about the concept/idea
Mentioned above are just some examples of methods you could use to validate your idea and product.
There are many different ways how can you validate your idea — just pick the one you think will gather the feedback the quickest and cheapest.
Sometimes it might be a survey sent to current users, sometimes it could be creating a product on Producthunt to check for market demand while sometimes it could also be a project on the crowdfunding platform.
In most cases, you will need real user/customer feedback. User research methods play a really big role in the idea validation process. If you would like to learn more about different user research methods, check out our article about user research methods and get access to a toolkit that might be helpful if you need help with picking out the best user research methods.
In some instances, just getting feedback through a survey might be enough, while in some cases, you might need to create a more complex product and follow it along with an entire digital marketing strategy to collect leads and gather feedback.
What follows after you’ve picked out a method for your idea validation campaign?
After you’ve defined many different ways you could create your idea validation tests, pick the fastest and cheapest way to test your idea.
Once you’ve decided on a way to test your idea, create a traffic and digital lead gen strategy — from mapping out the entire customer funnel, picking out efficient performance marketing channels through which you will drive traffic, defining qualitative and quantitative analytical data points, preparing digital communication assets to defining user research methods you will use to gather feedback.
In the second part of this article, learn more about the Martian & Machine approach to idea validation and tactics that turned out to perform the best for us for idea validation campaigns.
Originally published at https://martian.ventures.