How to Validate a Business Idea to Avoid Developing Unwanted Products
Entrepreneurs, very often in their excitement, start developing a business idea into a tangible product without determining whether there is a market for it. When you do that, you are likely wasting your time and money on a product that no one wants. That is why it is essential that you know how to validate a business idea first.
Validating a business idea enables you to find out if there is a need for it in the market, can it solve crucial pain points, the number of potential consumers, and how much money they would pay for it. Here are a few ways to validate your idea before developing the product prototype.
Already have a validated business idea? Here is something to help you choose the right software development company for your business.
How to Validate a Business Idea?
Do an Online Search: It is possible that your idea is not unique at all. Through a simple online search, you can discover products that might have germinated from a similar idea-seed. It is better to think of a new idea if your concept does not offer something extra special or improves the way of doing things.
Set Up a Landing Page: Setting up a standalone web page, the landing page, helps determine if there is a market for your business idea or not. Your landing page should have a value proposition, concise content, images, and clear call-to-action, and you can promote it on start-up platforms, social media platforms, through SEO and targeted ads. If there is a need for the product, the target audience would flock to your landing page; and if not, you will know from the results.
Create an Explainer Video: Visual content does a better job of explaining than text. You can properly demonstrate your product, its features, and benefits through explainer videos. The live and animated videos can tell the target audience about the value proposition. Moreover, you can accelerate engagement with them. This helps to identify the merits and demerits of your business idea.
Here is the very first DropBox demo video voiced by founder, Drew Houston back in 2008. This simple video about an MVP helped grow their beta subscriber list from 5,000 to 75,000 people overnight.
Hypothesis Testing: You can assess your value proposition via hypothesis testing methodology, without developing a product prototype. You can use either a Wizard of Oz MVP or a Concierge MVP to validate your business idea.
- Concierge MVP: You provide the value proposition manually to a small group of test customers, without involving any technology. You perform the service following the same steps as the final product.
- Wizard of Oz MVP: In this method, you make the test customers believe that the process is automated, and no humans are involved. They see the working front of your product (often a simple landing page), while you complete the service manually in the background.
Crowdfunding Sites: With crowdfunding sites such as Kickstarter and IndieGoGo, you can gauge the level of interest in your business idea, as well as determine whether the product can solve specific pain points. Moreover, you also find out if the product is exciting enough to get funded.
Single-Feature MVP: Single-feature minimal viable product (MVP) enables you to test one core aspect of your idea. You give your end-users this one-core-feature product to use, to get early feedback. It is one of the easiest methods by which you can validate or invalidate your business idea, and you can do so on a shoestring budget.
Now that you have a basic idea about how to validate a business idea, you can get creative and start reaching out to your customers to find out first hand if your idea really has merit or not.
Here are some useful tools that can help you on your idea validation journey:
If you need more advice on how to validate a business idea, or plan your first MVP, feel free to ask your questions via e-mail at firstname.lastname@example.org, or by signing up for a free consultation here. We will do our best to answer all your questions, no strings attached. Thanks for reading!