How to Validate a Business Idea in 5 steps
When you want to start a business, you are no doubt overwhelmed with the excitement. You want to launch it now, help a lot of people and above all, earn money.
The truth is that, if you have a little experience you will know that launching too fast is extremely dangerous. You can spend months working and in the end get no results.
If you want to avoid working for nothing, you must make sure that your solution is valuable to the market and that you can make it profitable.
What is validating a business idea?
Validating a business idea involves checking if the business you have in mind is viable in the market. This process lets you know if your project has a future.
In a few weeks, you will be able to launch your prototype to the market and receive feedback from customers.
Why validate a business idea?
The reality is that there is no certainty. It may sound harsh, but there is no one who can guarantee the success of your idea. This uncertainty is something entrepreneurs learn to live with.
We move forward without knowing for sure if we are going to fall because we accept that mistakes are just one more facet of this adventure. But the fact that there is no absolute certainty does not mean that you cannot and should not validate your idea.
Starting a business implies a series of sacrifices on your part and an effort in terms of money and time. Therefore, trying to contrast your idea with the market (and with yourself) is more than necessary.
What happens when you validate that the foundations of your business idea are solid?
- Tranquility: It is not the same to start with nerves than knowing that you are on the right path.
- Security: It will be easier for you to explain to your family what you are going to do and why you are doing it.
- Guarantee: Although there is never an absolute certainty, the analysis below will help you to discard false ideas and to debunk several myths about business creation.
Making the decision of which market you are going to hyper-specialize in will not take you 2 weeks, but neither will it take you a few hours.
Take this exercise for what it is, an approach to the market and a reflection on what is the perfect business for you. And if when you read the latter, you only thought “that makes me a lot of money”? Then, you’re in the wrong place.
How to validate a business idea?
At this point, you should have already been able to find within yourself, the best possible candidate to create your online business.
To validate a business idea you should follow these steps:
1. Focus on your best idea
This step is the key. In this critical stage, make sure that the business you are going to create fits your expectations, talent and skills.
If you are currently suffering from a lack of purpose in your work life because you have a food job that you do NOT like. The worst thing that could happen to you is that you create a food business, which after 3 years makes you deeply unhappy.
A great professional can always enjoy:
- Good money
- A good recognition or status
- A great purpose in their actions
2. Understand your niche client needs
Now that you’re clear on the best online business candidate in your niche, you will have to spend time with your target audience talking to them about their dreams, fears and frustrations.
You need to identify a real, acute problem – one that requires short-term action. A problem they don’t know how to solve on their own.
You’ll have to think small and specific, in order to connect deeply with your audience.
3. Create an irresistible offer
The time has come to help your target audience. This means a minimum viable product. If you design it using the knowledge you’ve gleaned in the previous stage, this offer is going to spark genuine interest from the very first minute.
In other words, your offer should sell itself because it is just what your target audience needs to reach their goals.
4. Look for your first client
Paper can hold everything, but if you want to validate your business idea you need clients i.e. someone who pays you to access your product/services.
Free services do not validate anything. It’s time to go after your first customers, proactively, doing digital prospecting in the digital environments where you know your potential customers are gathered.
Connect with them, exchange messages and value contributions.
And invite them to a 1-on-1 call with you, so that you can help them and then propose, in a natural way, your solution as the best possible accelerator for them.
5. Deliver your prototype to the first customer
If you have reached this stage, it means that you will have won your first customers.
Selling is a great feeling, but now the hard part begins: delivering what you have sold.
The idea is to operate first with a prototype: a virtual service that you perform for your client based on a series of virtual consulting / coaching sessions. These services can be launched on the market literally overnight.
It is not your time to write a book, create an online course or develop a software before you start selling. You can create these products later in your entrepreneurial journey.
Now you have to validate that the business idea makes sense, and above all that you know how to sell it and deliver it digitally, because these are the conditions you want for your online business to be able to live the life you have in mind.
Follow step by step the process to validate this business idea, capturing your first customers.
I am Nikesh Mehta, owner and writer of this site.
I’m an analytics and digital marketing professional and also love writing on finance and technology industry during my spare time. I’ve done online course in Financial Markets and Investment Strategy from Indian School of Business. I can be reached at [email protected] or LinkedIn profile.