How to Validate Your Business Idea

This article was authored by Jeanne Heydecker and originally published on the Woomentum network.

So you’ve been out with your buddies complaining about working for the man and you all discuss some business ideas that have been brewing in the back of your minds.  At some point during the conversation, perhaps you, decide to take your idea seriously, but you’re not ready to quit your day job and you shouldn’t. Yet. You need to validate your idea and see what the market will bear.

Is this a market you know well and know the players in this market? Do you know their business models and how they make money? Have you worked or know someone who has worked in any of these companies that could give you more information, maybe over coffee or a drink? It might give you insight into whether the market is increasing their automation capabilities or investing AI or VR to augment their product or service.

Have you validated your business idea with potential customers? Do you know who your target audience is and do you have access to a select number of them in order to ask them what they think about your idea? Does it solve a challenge or frustration they have? How valuable would it be to have that product or service for them? How much would they be willing to pay for it? How many of their friends/colleagues would also need your product/service?

If all signs point to yes, it may be time to build out a Minimally Viable Prototype (MVP). For software and Software as a Service (SaaS), these can be simple sites with the bare minimum of features that work to produce the end result. You may want to look at crowdsourcing or showing up at a local Startup Weekend, BarCamp or Tech Cocktail to find people willing to provide the assistance you need.

If your idea is a product, seek out a CAD designer who can assist you in developing your prototype and find a 3D printer near you to create a few different versions to show to your target audience. Ask the the same questions again and add a few more, such as, “What other features/ components/ colors/ options would you like to see added to convince you to recommend this to others?”, “What differentiates this product/service from others you’ve seen in the market?”, “Who else has a product similar to this and what do you like about it/them?” Hopefully these answers will help you with the rest of this process. You’ll need at least seven people. This will give you approximately 98% of the issues/opinions you would see as trends in a larger sample. More is always good, especially if your product is in the consumer market, which will require possibly segmenting your target personas (teenagers, single young adults, small families, middle-aged consumers, senior, etc.) to determine the sweet spot for ramping up fast and where to expand to next.

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