It is often said that a strong business idea is half the battle. In reality, however, not every concept provides great potential for further development. So how to check if it will work? Is there any way to verify it? In the following article, we’re explaining how to validate your business idea in 3 easy steps. Read on.
How to validate your business idea? – table of contents:
Do market research
Validating your business idea can be divided into 3 stages. Before moving forward with your venture, do market research to find out if there is space for your product. This simply means checking the number of potential customers who might be interested in your services. Several key issues must be analyzed at this stage.
First, you need to assess how many customers you need to make your future business profitable. Think about the approximate number of transactions that will generate a profit. Then, you need to consider whether there are enough potential customers. Define your target group and create a buyer persona. Analyze the statistics to determine your market share.
Another step to validate your business idea is to check who your competitors are. Several competitors might mean that the market is already saturated, and you need to think about how to stand out from it. What can you do to encourage your competitors’ customers to use your product? If there is no competition, you can assume that the market in question is not yet established, so your business concept has a great potential for further development.
When validating your business idea, it’s worth using various sources of information. You should analyze available market reports on the selected industry and data from statistical offices.
Get feedback from your target audience
Once you’ve conducted the market research, it’s time to focus on potential customers. At this stage you need to get feedback from representatives of your target group. This is the only way to learn if the planned venture is tailored to the customers’ needs. By the way, it is also worth looking for new ideas for sales. It is worth finding out which features of the product are rated best and which are rated worst. You should also ask potential customers about their preferred buying channel.
Before you ask the above questions, however, you need to determine who to ask them to. This is where the work with focus groups and interviews begins. Where to start? It’s best to start is with friends and family. You should also ask them to contact their friends who would fit into your target group. Social media and online forums are also powerful tools.
There are a few ways to get feedback from your potential customers. You can contact them personally and ask questions directly. Other solutions are social media surveys and traditional questionaries. It should be noted that surveys are important, but they are not always reliable. Unfortunately, people tend to say one thing and do another. There’s nothing you can do about it, however, you need to consider it.
Test your product
If you want to precisely validate your business idea, test it first. In fact, it doesn’t require a lot of money at all. If you introduce a new product, it does not need to have all the functionalities right away. Developing a Minimum Viable Product (MVP) is enough. Although MVP is a product in the early phase of development, it can attract your first customers.
In this step, you should also launch your sales channels. Test various versions of your product and check the demand for it. You should also get feedback from your first customers who will tell you whether your business idea is worth pursuing, and in which direction your company should be headed.
How to validate your business idea – summary
In the early stages of startup development, you need to thoroughly analyze and evaluate your business idea. Even if it seems good to you, it doesn’t mean that it will be successful. Do the market research first, get to know your customers’ needs, and then test the offered solutions.
You’ve just learned how to validate your business idea. Other articles you may like: 7 questions to determine if your business idea is worth pursuing.
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