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How Do You Validate Ideas: Actionable Guidance

business goals startup Jun 28, 2019

5 min read

It finally hit you! That out-of-this-world, game-changing business idea. You can’t stop dreaming about it, thinking about it, and drawing on napkins about it. 

You know exactly what you need to do, what your business model will look like, and who your customers will be. You can already see them lining up out the door.

After months of planning, investing, website building, branding, marketing, and every other little detail there is, you launch and… nothing. Customers are not only not lining up, but they’re also not even taking a second glance at you. 

You realize that as great as your idea was on paper and in theory, in reality, there is simply no demand for that particular service or product.

You’re not alone: the majority of entrepreneurs become too caught up in realizing their ideas as soon as possible that they don’t take the time to validate a business idea and figure out if it work. 

The Fix: Validate Business Ideas

Arguably, idea validation is one of the first steps to take after you have your lightbulb moment or burst of courage to go after what you’ve always dreamed of. 

Before you jump into idea validation, you must have a good grasp on what niche you want to operate in and who your target audience is. These factors may change through the idea validation process, but you need a specific place to start and then go from there. 

Validating an idea will take time and will probably have you going back to the drawing board more than once, but it is what will save you from investing time and money into a business that fails to launch.

Here’s what the typical idea validation process looks like:

  1. Seeking feedback
  2. Exploring the competition
  3. Testing out the product/service

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How to Validate a Concept: A Case Study

After crashing and burning with one failed business attempt, Andrea has learned her lesson, validating business ideas is important and she will take it seriously this time around.

She had her lightbulb moment when she recognized a problem her co-workers had - finding affordable, fashionable career apparel for young women. 

After conducting preliminary research, Andrea decides that a monthly subscription service will be the best business model for her. She also specifies her niche and target audience in detail. 

Everything looks good in theory. She has all the vital information gathered and must now determine if her audience has a demand for a service like hers. 

As Andrea tests her idea, she:

  • Seeks feedback from various groups. Andrea knows feedback is the first step of testing idea validity. She first speaks with family and friends to see if her idea has any blind spots and then seeks out women who fall in her target audience. Andrea conducts a focus group and a couple of one-on-one conversations with her co-workers and their friends who fit the same demographic. She gathers more insight on what problems they want to be solved and tweaks her idea to better meet the segment’s needs. 
  • With a more solidified idea, Andrea explores the competitors in the market. She identifies weaknesses in the competitors’ businesses and works solutions into her idea. 
  • With everything looking good, Andrea knows the next step of, how to validate an idea is to physically present her product/service idea. She shows a select group of target audience members what her website interface will look like and how they will register for the service. She prepares demo subscription boxes with clothing from the wholesaler she plans to work with. After the test group goes through the trial, Andrea collects their reactions and comments. The test group is satisfied with the service and agrees it’s something they would use. 
  • Andrea’s idea validation is complete. She can rest assured that there is a market for her service and can continue working on launching it. 

How to Validate a Business Idea: 3 Steps

1. Seeking feedback.

There are two levels: level one - friends and family; level two - target audience. Level one doesn’t need an explanation, but it’s level two that most people get caught upon. 

With your target audience already identified, start reaching out to businesses or people that fall into that group. If you are looking to service yoga studios, for example, call up every yoga studio in your area and ask to speak with the manager or owner. If you’re targeting college students, work with your local university to organize a focus group. Also, explore interest-based Facebook groups to find one that resonates with your target audience and that you can utilize for idea feedback. 

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Important: Don’t become attached to your idea so much so that you will stick with it no matter the feedback! It might need some revision to become the (most profitable) solution to the problem your audience wants solved.

2. Researching competitors.

Google is going to be your best friend during this step. Research how big the market is, who the competitors are, how different your idea is from what is already out there, etc.  

Look at who they’re selling to and how they are marketing themselves. You shouldn’t be offering more of the same. Add additional value to make sure your product/service has a chance at surviving. 

All you need is a slight variation of audience or message to make your business a unique offering in the market. For example, if a competitor is focusing on an older demographic, try to see if you can make your business more appealing to a younger audience. 

A large market isn’t the important thing, you’ll want to be in a niche anyway. Try to answer these questions to validate your idea:

  • Is the market growing?
  • Are the players in it already doing well?
  • Am I differentiated enough?

3. Testing it all out.

You’ll want to create an MVP, or minimal viable product (or service), once you determine there’s support for your idea and it’s differentiated from the competition. The MVP will depend on your business idea, but make sure it’s a working prototype of the app, product, or service you plan to offer. You will be able to work out kinks in the idea and see if it’s something people are actually going to use in reality. The key is to test at a small scale with a minimum investment until you are certain that you can invest more resources and capital and succeed. 

The most dangerous act in business is guessing. Now that you know how to validate your business idea, don’t get so caught up in guesses and hypotheses that you start viewing them as facts. Test, test, and test until you are ready to launch. Now get out and validate your idea!


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