Validating your business idea is one of the first things you should do before starting your own business. As this will be a great indicator of your business success or failure later on. You can validate your idea simply by following these five steps.
Step 1. Find out if you solve a problem
Most startups fail because they start with an idea, not a problem. Millions of people have millions of cool ideas every day but would all these ideas solve real problems? I doubt it. Real problems don’t mean complex ones. Finding a solution to a taxi hailing issue isn’t complex at all, yet Uber is a multi-billion company that operates worldwide.
The starting point is to find a solution to a problem that you or people around you have experienced. If you feel that you can turn this solution into a real business, ask others whether they have the same problem and whether they will want your solution. This brings us to the second step.
Step 2. Find out if your target customers will use and/or pay for your solution
Feedback is always necessary to build a product customers really want but it’s even more crucial at this stage. To make sure you get impartial advice, don’t limit yourself to asking feedback from friends and family. Ask anyone you come across, the more feedback you get, the better.
Step 3. Learn about your market size
You got your feedback and a few said they’re experiencing the same problem and would like a solution for it, good but how many other people are there in the same situation? The revenue you will generate will depend on the market size you are operating in. There is no problem with going niche to avoid fierce competition, in most cases that’s even a good thing, but you do have to be careful on not going too niche, i.e. in a market where there simply isn’t enough demand for you to make ends meat.
Step 4. Do your research
Many entrepreneurs tend to overlook the importance of conducting primary research, yet that’s one of the most important tools to find out whether your product will find product market fit. Who else is better than your target customers to tell you whether they will use your product and/or pay for it.
Step 5. Built your MVP
You have conducted your surveys and focus group and you’re now confident that your target customers want your product and will pay for it. Great! but is this enough? well no. Receiving a positive response is a good indication that you should go to the next stage, which is to build your minimum viable product or MVP. There is a difference between what people say they will do and what they actually do in reality so having an MVP is the only way to confirm this.
A minimum viable product is the first version of your product. This is the cheapest way to test your product before spending more money, time and energy on it. If your target customers respond well to the MVP and buy your product or download your books or subscribe to your blog, then you can go ahead with building your business. If not, don’t be discouraged! Most businesses and startups adjust along the way, that’s why the MVP is there. So focus on gathering feedback from your early customers and tweak and change things to match their needs until you find product market fit. You will know that you found product market fit when your product starts converting. This being said, Product Market Fit isn’t static, you will have to keep adapting to your customers’ changing behaviors and needs to stay on the ball.
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