Do you have a great idea? I’m sure you do! The best businesses always start with that EUREKA moment.
But there’s one thing that’s more important than the idea itself. That’s figuring out if the business will be successful or not.
What do I mean by that?
While there’s no way to be sure that your new idea will take off, there is one thing you still should do before investing time and money into your new business. It’s called Idea validation.
Idea validation is the process of evaluating your idea for viability. This means answering a few important questions like:
Will this idea make me money?
Are people going to buy what I’m selling?
Is building a business the right thing to do?
Idea validation does not have to be intimidating. In fact, you may have already done it. I know for myself, I unwittingly validated my idea without even realizing it. I created my company Fulfillity Hair, after finding a solution for my own hair growth issues. At the same time, I noticed that the natural hair and self-care markets were growing pretty rapidly so I decided to join the wave.
When I joined a coworking space in Salt Lake City, however, my idea was met with a lot of doubtful inquiries that left me questioning myself. This led me to formally validating my idea. I want to share this process with you for a few reasons.
To Encourage You – Idea validation is meant to encourage and not discourage you. Once you are confident that your idea has a high chance of succeeding, you’ll find it easier to traverse any setbacks you may encounter.
Save You Time and Money – Imagine you have a stack of hundred dollar bills. Now imagine ripping each $100 note up, one at a time. UGHHH! Hurts your heart doesn’t it? That’s sort of what you’re doing when you don’t validate your idea. You can have a ton of potential and a lot of good intentions with your product or service, but if no one wants to buy it, you can end up wasting your time and money trying to push a dud.
Help You Avoid Stress – There may be many points in your journey that are hard. Give yourself tools to address the doubts by firmly understanding the chances of your idea succeeding.
Raise Some Money – Whether you’re looking for a loan or venture capital, idea validation will help you raise money for your business. The more research you have to prove your idea is a solution for a problem that people will pay for, the easier it is for investors to take a chance on you.
Now that you know why you need to validate your business idea. Here are a few ways you can do it.
Presales are the ultimate sign of viability. What are pre-sales? Well, exactly what they sound like. It’s selling the product/service before it is finished or created. You can do this with a physical product, coaching, services, etc. Presales help you test the waters and gather capital to create your product.
You can do this through crowdfunding websites like Kickstarter. Kickstarter is a platform where creatives/entrepreneurs can present an idea and engage friends, family or strangers to pledge funds to bring the idea to life. The ideas on Kickstarter vary from hydrating water, to films, to high tech winter coats! Check out www.kickstarter.com for some inspiration.
Here are a few other ways to collect presales:
- Sell your online course before you are finished creating it. Once you have pre-sales, start creating the content.
- List your item/service on Craigslist or Ebay and gauge the interest.
- Create a Splash or Landing Page and start collecting emails of people who are interested in learning more or who want to reserve your product/service at a discounted price.
- Create Social Media Profiles and try to build engagement (I like to use namecheckr.com for a good idea on what social media profiles are available)
Find Your Competitors
This may sound counterintuitive, but the presence of competitors can help validate your business idea. The great thing about the existence of others in your niche is that they have already done the work of identifying the target market and testing products that sell. Even better, is if you can identify what is already out there and just upgrade it! Here are some ways to validate your idea by checking out the competition.
- Use Search Engines – Google your niche and click on the top websites and advertisements that come up. Evaluate the business for size, scale, and
- Search Amazon – If you are selling products, look for competitors on Amazon.
- Create A Google Alert – Create a Google Alert so that you are notified each time your competitor or niche is mentioned.
- Find Competitors on Social Media – Use hashtags to explore businesses doing the same thing.
- Talk To Potential Customers – Ask around. Find out how people are currently solving the problem that your product/service addresses.
- Yellow Pages – If you still have that book around, skim the ads to see what’s there.
- Use Directories – A service like InfoUSA can provide a curated list of existing businesses (or even potential clients) in your niche.
Identify Your Problem
Many new business owners make the mistake of assuming they know what a potential client wants. The goal here is to make sure to identify a real problem so that you can focus on perfecting a product/service that solves the problem. How do you find problems? Ask! (Here’s a tip. Ask ONLY about problems, not for a wishlist of solutions. People have problems everyday, if they knew a solution they would have found it already.)
Here are a few ways to identify your target market’s problems
- Ask open-ended questions similar to the deep-dive survey in the book “Ask” by Ryan Levesque. (You can get a free copy at getaskbook.com)
- Reach out to your target audience by sending private messages via Social Media – When I first started The Six of 7 I was unsure what women were struggling with when starting their business. So I sent private messages to almost 100 female entrepreneurs of color. Not everyone responded, but those that did respond, gave me a long list of topics to start with.
- Lurk in comments sections of articles and relevant groups. You’ll learn alot about the needs of your target audience.
- Create a Survey with simple tools like Google Forms, Survey Monkey, or Facebook surveys to help you get anonymous feedback on your idea and the problem that you are trying to solve
- Reach out to people who leave poor review on your competition’s products. They have a clear idea of the needs that are not being met and will likely enjoy having an ear to vent to.
What’s selling? Have you noticed that women are really into natural hair these days? Well maybe, it’s time to get into the natural hair market! Or have you noticed that people around you are really interested in vegan diets and clean eating? Perhaps a natural food product is a perfect idea to launch. Researching current market trends can be a great way to validate your business idea. Here are a few ways to go about it.
SimilarSites.com – If you’re only aware of a few other businesses in your niche use this site to find even more.
Google Keyword Planner – This tool helps you get a pretty good gauge of how popular your niche is. Google’s keyword planner has data on how often certain phrases are typed into Google’s search engine.
Alexa – Alexa allows you to research websites. You can peek at a website’s traffic volume, ranking, demographics, etc. It’s pretty expensive but 7-day trial should give you all the access you need to get started.
SimilarWeb.com – This site is similiar to Alexa, but it provides a lot of free information without signing up. I find the information to be a bit more digestable organized.
Facebook Audience Insights – This tool allows you to study the interests and demographics of Facebook users. Facebook has so much information about its users. This is a great way to research Facebook groups, pages, and followers in your niche. I talk about how to use this in my FREE Ideal Client Course.
BEA.gov – A government resource based on census and economic data.
Google Insights – Google insights is made up of 3 tools- Google Trends, Surveys and Correlate. All 3 are great for exploring market trends and consumer behavior.
Sell The Damn Thing
I’m talking finding customers. Actually creating and selling a small batch or samples of your idea is as close as you can get to validating your idea. This works in all cases. If you are selling food, why not sell small goodies at a local event or to your neighbors?. If you are offering a service like design or coaching, try recruiting up a few test clients at a discounted rate. It’s a small investment that can pay off in the long run.
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