Your startup idea can be the next big deal in the business world – but how’d you know that? After all, there is a big difference between having the most perfect idea and converting it into a million-dollar business. Statistics show that 9 out of 10 startups fail (Source: Startup Genome).
What can be the reason so many businesses going down? There can be many but one factor that plays a major role is improper or inadequate planning. When you’re spending time and money developing your idea into a business, it’s wise to first test before you lay down all the parameters. Here we’ll share a step-by-step guide so that you can make sure your startup idea is what the world wants right now. Before that, let’s understand why it is important to test an idea.
Why should you test your startup idea?
We don’t search for products, but we search for a solution to our problems. If a product identifies the needs of the targeted customers, it isn’t difficult to find itself its ideal buyers. However, you’ll be risking a lot of resources if you blindly assume that your idea is going to be a blast and customers will line-up to buy your product. That is why before presenting your business idea in front of the world, you need to check whether its motive impacts a small or a large number of people. How do you do that? By testing your idea!
Validating your business idea will provide you with a certain level of satisfaction that there are people who will pay for your product or service if you’ll offer it. In other words, you will get an insight into whether you’re investing your money and other resources into something that people may like.
Most new businesses often skip this process mostly because they want to speed up the process and creating a business plan or model will only add extra time. Without identifying their target audience or the market they want to serve, they face problems and eventually fail. That is why the validation process is perhaps the most important step in building relationships and establishing trust with your potential customers.
How to validate your business idea?
Following are the 6 steps you can follow to identify if your business idea is here to win:
1. Define a problem and give a solution
Most founders face difficulties in business development as they fail to understand if the world needs their product or not. To avoid this mishappening, you need to first identify the relevant pool of problems that you can solve.
When you have found a problem, define who is facing this issue, and identify your target market. You cannot obviously cover the entire market from just the very beginning. What you can gradually scale your product if it does well for a group of customers. For this, you need to first understand who is your client? Where does your client work? What is the size of his/her company? What industry do they work in? And so on.
Now that you have understood your customers and the difficulty faced by them, it’s time to give them a solution. Your product will be the solution to the existing problems of your customers. What are you solving? An old problem in a new way or a new problem in an old way? Whatever it is, focus more on the value you offer than the sales.
2. Build a Minimum Viable Product (MVP).
A minimum viable product is a working model of an idea that helps entrepreneurs to collect feedback and learnings of their idea from the customers with minimal effort.
With an MVP, you can create a working model of your idea and note the pros and cons of it before you actually introduce it to the market. It helps you spot big mistakes and gain valuable feedback before you go ahead scaling up your startup.
MVP helps collect data on what’s working right and what can be removed to create a near-perfect product that has a higher chance of success.
3. Present it to potential customers
Once you have your MVP ready, you present it to the potential target customers.
Talk to at least 50 potential leads to identify if they identify with the problem as you do. this will help you figure out if this is a real problem for a majority of your target market or just a few. Select these 50 potential leads carefully to better ideate the test. These can be your previous customers, your friends, or family who you view as your best critic. Hand-pick your test group and then ask these people to pick your ideas apart.
4. Make changes as per the market need.
After you have collected feedback and comments from the initial customers, it’s time to implement them. Not being attentive enough to the feedback you receive can be harmful to your product running in the long-run. Do not forget that you are building a solution for these real sets of users.
What are the parts that need correction? What are the parts that deserve more attention? What can be removed or what can be added? Make sure you monitor the user feedback very closely at each step.
5. Create a test website and social media channels.
The word about your product or business is out in the market, it’s time to help your target market know more about it. A website is the best place where your customers can go to get more information about your product. Building a website with a landing page specifically talking about your product with relevant images can be a great idea. In addition to this, you can also use social media platforms to spread the word about your product and monitor how many people are interested in what you have to give.
6. Think local before going global.
Rene Schob, KPMG Romania’s Head of Technology Steering Committee, says that the first step towards conquering the world is conquering the local market.
You are already starting well if you kick-off from your home territory first. This is because, at home, you have a better idea of when and how much can you push, you know the local customers, and even the way you can make the right impression. More importantly, you are familiar with how to connect with the local market and how they would react to your solution.
So when scaling your startup idea, it is important that you first win the local market. Once you have done that, it is quite relevant to focus on a broader global market.
An idea can change the world as the internet did or the iPhone. But make sure you first validate your startup idea. Don’t go blindly to build a startup without understanding your target market behavior and needs. Instead, follow a strategic path to test your startup idea.
Carefully define what your target audience’s problem is and how can you provide them with a solution. The next step is to build an MVP with a minimal set of features, to collect feedback from your initial customers. Implement the changes and provide your customers with a well-set version of the product. Lastly, when you launch your product think about the local market first. Does it fit well with your local customers? If not, make it perfect for them first before you go global. This way you will be easily able to validate a product or a business idea.