- August 30, 2022
- 10 minute read
English Teacher & Technology Enthusiast
Many people don’t realise that quite a large percentage of business ideas fail in the first year and the main cause for this is lack of validation. Although validation isn’t a guarantee of success and is definitely not an easy process, it is necessary in order to establish if there is actually a need or demand for your product or service within your target market. Will people actually buy your product or service? Will it be as profitable as you anticipate? Before you spend time and money on your new idea, it is important to validate at these early stages to avoid disappointment.
During the validation stage, you will need to put ideas to the test to check feasibility and scalability. By conducting market research and running several predesigned tests, you’ll be in a better position to filter out any unsuitable ideas. You will need to be ruthlessly critical and bear in mind that ultimately, your aim is to build confidence, trust, and to convince the customers that you can deliver the product or service they are looking for. However, it’s not only the customer that you need to convince and build confidence with. You will also need to consider investors, crowdfunders, and banks, in case you are looking for funding to help with your startup.
In the initial stages, it would be wise to check if your idea has been done before, if it still exists and if it’s successful. If so, is there a market for another product or service with similar features? If not, what went wrong? What makes your product better? How would you succeed where others have failed? Learn from other people’s mistakes and improve upon them. Use your skills and knowhow to the fullest whenever possible. In areas where you are less confident, delegate and outsource to those who have the relevant expertise.
Once you have gone through this initial assessment, you’ll be ready to take the first tentative steps to validating your business idea and possibly turning it into reality.
Firstly, who is your target audience? Establishing your target audience at this early stage is vital so, to begin with, target a small number of people. In doing this, you’ll be in a better position to establish whether there is enough demand to make your business model work with the price point that you want to set.
Next, you will need to assess the value of your product. If this product already exists, you will need to identify what makes your product better and what will make it stand out from the crowd. This may be the pricing or the business model, or it may be the features that are better.
Then, you should think about assumptions you have made about your potential customers and about problems that you are trying to solve. If this is a new idea that is not yet available, there may be a reason for this. Do these problems you have identified even exist and are they worth solving? If at this stage you are convinced that there is a need for your solution, will your product or service solve it?
Before you go on, you should also check if your business model is scalable. Are you going to be able to grow your business and increase your revenue at a rate that you consider reasonable? For this, you will need to establish your expectations. In defining the minimum success criteria of your product or service, you will then be able to set benchmarks according to these expectations and measure them up against the scalability aspect.
The most important thing to remember is that the customer is your bread and butter. If you are not providing what they want or need, they will not come to you. You should aim to find out what motivates them, their preferences, and which products they are currently using. There are many ways in which you can find out what your potential customers are looking for. Find at least five existing users who are very keen on using your product.
On a more personal level, you could interview friends and family. However, a lot of the time, these interviews may produce biassed opinions, which you will need to take into account when assessing this feedback. Ask them to be as honest as possible and not to think of you as a friend or member of the family when giving their true opinion. Comments such as: “I think it’s a wonderful idea!” may sound great but, would they actually buy the product or service?
It may also be beneficial to hire a market research company, as they can cast their net further afield. This information will complement the previously mentioned efforts and will help to form a clearer and more realistic picture.
Looking at the bigger picture will help you to compare the differentiating factors of your product or service against the larger market. Look at the total market and try to establish what percentage of this market your segment occupies. Take a look at the sales data of potential competitors and check once again if this falls within your minimum success criteria. When looking at this sales data, take some time to assess how big your slice of the pie will be.
You should also consider your demographic – age, gender, education level, profession, income, and location. In researching and observing the natural living environment of users, you will get to know more about their behaviour. If your target demographic is within easy reach, you could be onto a winner.
Researching the search volumes of related terms is imperative and there are many tools available to help you do this. One good option is Google trends, which checks how often a particular search term is used by real people when searching on Google, compared to various other regions and languages. You could also try the Google Keyword Planner tool (available only if you have a Google Ads account) to check for more information on the most important keywords. If a similar product to yours is available on Amazon, it may be worth checking which keywords customers would be using on this platform to find it.
Validate The Market: If you have a strong presence on social media platforms such as LinkedIn, Facebook or Instagram, to name a few, producing online surveys is an easy way to reach a considerably large amount of people and receive their feedback. Collect all the possible market information, to make a rough estimate of the size of your target users.
You will also need to perform an efficient competitive analysis, in order to find out what your future competitors are doing to solve a similar problem. You will need to check:
Validate the product by building a prototype and look for different ways of testing it on your users. By defining your Minimum Viable Product (MVP), you do the least amount of work possible in the early stages, until you have established if your idea is likely to be successful.
At this stage, you can work towards validating the consent to pay. How many of your potential customers are actually willing to pay for your product? For validating the willingness to pay, you need to build a website that will explain all the aspects of your product. You should release a beta version of your product or service, so that potential customers have the opportunity to test it out and give you realistic user feedback. This information will help you to assess all the strengths and weaknesses of your idea and to make any necessary adjustments.
What you need to do is:
You can also set an option of pre-ordering by applying offers based on the customer’s purchase.
The aim of this lean strategy of product validation is to cut down the cost and time by maximising the chance of a successful launch.
Checklist:
Proof of Concept:
Once you have gone through these stages, you should have all the required information to make a more informed decision about your product or service. It is important to remember that while the validation process is effective in helping to minimise risk, it doesn’t eliminate all the problems. It does however help you to be better prepared if any potential issues do arise and to deal with them in a more effective way.
