Being an entrepreneur and running your own business is becoming ever more popular, and for good reason – it brings with it a lot of freedom and independence, as well as opportunities to express your creativity and to have flexible working hours; while people are feeling increasingly unfulfilled and far from secure in their full-time jobs. But how do you come up with a business idea? And how do you validate your idea so that you know it’s going to make you money?
The danger with starting with the premise that you want to launch a business is that you’re explicitly trying to come up with startup ideas, rather than trying to meet a need that exists in the market. The risk here is that you create something that no one wants! On top, you may think your idea is revolutionary and bound to take off as a huge success but you really don’t know that until it’s proven in the market. Just look at Dragon’s Den (or Shark Tank in the US) – the millionaire investors will always favour the businesses that already have documented sales over an idea that may sound appealing but hasn’t yet been tested.
So how can you go about validating your business idea?
1. Consider your own skills, interests and experience
Whatever idea you decide on, you’re going to be working incredibly hard to get it off the ground and so it’s critical that you really care about what you’re doing. If you can find an area that taps into your core values and interests, and even better where you already have both the skills and the experience, you’re going to be that much more likely to succeed. So I would always start by asking yourself: What are you passionate about? Where do your unique strengths lie? How will you be different to the competitors who are already out there? What experience can you leverage that will give you a competitive edge? The idea may be great in theory, but are you the right person to bring it to life?
2. Ask your customers what they want
The easiest way to test your idea beyond your own brainstorming bubble is to talk to potential customers and clients. There is a caveat here, however. Did you ever hear that famous quote from Henry Ford: “If I had asked people what they wanted, they would have said faster horses”? Apparently he never actually said it (shame! it’s such a great quote…) but the message is just as valid: people often don’t know what they want.
So when you talk to people in order to check the appeal of your idea, try to focus more on the problems that they may be facing, rather than on the solution they envisage. Whether you do a survey on the phone or in writing, you’ll want to ask questions like:
- What’s the biggest problem you’re facing?
- How much of a problem is it, on a scale of 1 to 10?
- Would you be willing to pay for a solution to this problem? If so, how much?
That last question is crucial: after all, people ultimately need to buy your product or service in order for your business to successful!
3. Ask the experts what they think
Ideally you’ve chosen an idea that sits within your area of expertise, so that you have the skills and experience to know that it’s a strong idea, to know how best to execute it, and to be able to properly implement it. Sometimes, though, you may come up with a fantastic idea in an area that you’re not so familiar with. A bit of naïve optimism may help to dream big and potentially change an industry (think Uber, Airbnb, etc.) – but more likely you’ll be operating within an existing playing field and it helps to know the rules. Talk to experts who can tell you the challenges they’re facing in the industry, what are the restrictions and limitations, what’s the feasibility of the solution that you’re proposing. This can save you from working for months on an idea that will never work in practice.
4. Test it in the real world
The second implication of the Henry Ford quote, I think, is that there’s only so much you can validate an idea with consumers in a theoretical sense. That warm and fuzzy feeling that you get when everyone you ask says “wow that’s a great idea!” is all very well, but the real test comes when you actually have something real to market. Research is very important, especially understanding the pain points of your target customer, but you need to avoid analysis paralysis and get ready to launch something into the market as soon as possible so that you can learn and ‘pivot’ if necessary – before you’ve invested too much time and money in the wrong idea.
So once you feel you have a strong idea, get it live as soon as you can. Push out your solution, even if it’s not 100% there, and get some potential customers to pilot it. They can give you real user feedback to allow you to optimise the solution as you go, and they can also give you testimonials and referrals to help you as you start to advertise and grow the business. In fact, you don’t even need to have a product available to do this! You can simply put up a landing page, run some Google or Facebook ads, and see what kind of response you get. You’re never going to be able to choose “the best idea” based purely on the theory (and, in fact, there is no such thing, as it’s really all in the execution).
5. Choose to crowd-fund it
One way to really put an idea to the test, finding out how much support there is for a product and then leveraging that support to actually sell the product, is to use a crowd-funding platform. If you go with this option, you’ll only actually start production if you have a successful campaign, i.e. if you get a sufficient number of backers, making the risk low in terms of initial investment. That being said, this isn’t the panacea that you may be hoping for. Running a successful crowd-funding campaign will require a huge amount of effort from you and your team, creating videos and publishing updates, reaching out to influencers, and making sure that you launch with a big bang in those crucial first days of the campaign. There’s no point in launching a half-hearted campaign and simply hoping for the best, as you’re not going to validate the idea or and you’re definitely not going to build a successful business out of it.