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Most start-up businesses fail within the first year. Although the lack of adequate finance and failure to execute the idea are usually mentioned as key reasons for downfall, the main cause is inadequate market research.
It is challenging to know the exact potential of new ideas because it is difficult to tell the difference between a bad or a good idea.
At times, even the ideas that seem unrealistic turn out to be the best ones. Conversely, there are those ideas that seem to make sense but still fail.
Although most individuals desire their ideas to be loved, only a few of the ideas are worth implementing.
To know if your idea has a good chance of becoming successful, it should be validated.
What is Validation?
Validation involves gathering evidence on a business idea through experimentation to make de-risked, fast and informed decisions.
The purpose of validating an idea is exposing it to the reality of the real world before building and releasing the final offering or product.
Why validate your business idea?
The most important reasons to validate your business idea include:
- Test if the idea works to reduce the risk of implementing a wrong idea
- Leads to the creating of valuable services in the market at a fast rate
- Minimize costs
- Determine if the timing is right
- Prove the idea has real demand
How to Validate Your Business Idea
1. Establish the product concept
Write down the product concept by answering all the crucial questions that you can test. They include assumptions and the sooner you test them, the less risky it will be when you decide to launch your product. Some of the assumptions to consider for include:
Who is your target? Ensure you are specific when identifying the customer base. If you generalize your customer-base, you might have a rough time.
What market gap are you solving? A lot of entrepreneurs focus only on about their products. They pay attention to the product’s features, launching the product, and then become surprised when the product fails to perform well in the market. Start with identifying the market gap. Know what problems you want the product to solve. This helps in validating if your target audiences also view them as problems.
How does the product solve the market gap? After you determine what market gap that needs to be filled, you can now focus on the product. You design the product in a way that addresses the market gap.
What are the product’s features? The features should solve specific issues that address the problems in the market. The more quantitative, the better.
2. Seek Feedback
Talk to your potential customers and innovators about your business idea, particularly those you trust. You will need honest feedback from such people. Most people tend to get stuck in an ‘idea lock,’ especially when they are convinced their idea is perfect regardless of what other people say. If you find yourself in a situation where you are the only one who thinks that your idea is great, it is time you reassess.
3. Interact with your target market
After getting feedback, you need to interact with the customer base. You can also increase the size of your feedback by connecting with your customers. However, during this stage, that is not very important. Your goal should shift to focus on the right mixture of value propositions, features, and highlights that will be most attractive to the target audience.
You should narrow down the specifics of your business. Since you do not want to create a solution for a non-existent problem, this requires lots of face-to-face conversations. It might consume a lot of time, but it saves you countless hours and costs by getting a perfect solution on the first shot.
Moreover, you should share your ongoing setbacks and progress, inviting feedback to strength the audience engagement. Focus on offering positive experiences for your early adopters and innovators. They will inspire future customers through case studies, referrals, testimonials, and reviews. Make your interaction so inspiring that people picture their lives with your product in it.
For perfect validation, ensure you stay open-minded to find out which products related to your idea that customers are willing to purchase. You might unexpectedly get suggestions, tips and opportunities from your target audience.
Review all the feedback you gather through the interactions with your target audience and decide what works best for them.
4. Develop a Competitive Advantage
From the interactions you have had with your target customers, you will have built a list of individuals interested in receiving updates on your upcoming product. Now it is a hight time that you expand on your pitch and get some insights from the feedback you have gathered. Use the feedback and the insights you generate to develop a competitive advantage that will make your solution unique to the customer base.
You would be making a dire mistake by rushing to the market with a similar solution to what is already out there. Make sure you have a unique advantage that allows your business to generate more significant margins or sales, and attract and retain more clients than your competitors. The strength of your product’s competitive advantage affects your results in validating your idea in the early stages.
No one launches a start-up business knowing it will fail. Especially when you think your idea would offer perfect solutions for problems, make a huge difference in the world, and help individuals achieve their goals.
However, there is a possibility that your idea will fail unless it is validated using the methods discussed above.
These methods will help you communicate properly about your ideas, develop ongoing relationships with potential customers, and develop a competitive advantage – preventing mistakes that may be costly during the implementation phase.
It takes a lot of your time to talk about your business idea, but knowing you will improve it faster with honest feedbacks received rewards the time consumed.
Sharing your progress, including setbacks and mistakes, makes your target audience care about your idea.
The more individuals are interested in your idea, the more they will offer to help and stay connected.
Make sure you let your audience know that you appreciate the feedback given.
Anita is a Chartered Accountant with over a decade of experience taking self-employed business owners from financially confused to business savvy.
She is the creator of the ‘Go Self Employed’ website, which is her corner on the internet where she makes self-employment less terrifying.