So you think you might have the next revolutionary idea. You’ve noticed a gap in the market, assessed the problem, and put together an idea of how to meet that demand. Before you go rushing into the market and parting with funds, though, it’s important to validate the idea. With so many promising young companies failing, here are five ways you can safeguard yourself from a disappointing venture before launching.
1. Settle on a minimum viable product
One of the first things a new business idea needs is a minimum viable product (MVP). Entrepreneur Eric Ries describes an MVP as ‘the simplest form of your idea that you can actually sell as a product.’ Without it, how can you expect to present anything concrete to potential investors or focus groups? Deciding on what the MVP will look like allows you to set about creating a prototype, and should be a priority for any company looking to turn an idea into a business plan.
2. Identify who you are serving
A big part of this check is to look for the very product you’re looking to bring to market. Before putting any time into an idea, ensure that a similar product doesn’t already exist on the market - if it does exist, consider ways you could improve on the existing product, but be wary that you’ll have competition from the outset. If it doesn’t already exist, identify the population your product is intending to serve.
Once you have this, talk to them. If your product is intended to serve soccer players, visit a practice or call a team and discuss the idea with them. The feedback will give you a better idea of not just your product but also your end user. Without a defined user base in mind, it’s impossible to draw out an effective customer acquisition plan.
In the disruption-obsessed modern economy, there is a powerful emphasis on speed. So desperate is the need for young companies to enter the market quickly and fill their niche, that many open their doors without proper planning. We’ve all heard the statistic that nine out of 10 startups fail, and though this may be exaggerated it can pay to be patient and consider your business idea before putting it into action.
Venture capitalist Greg Isenberg said: ‘After I've gone through the process of writing down a bunch of ideas, I don't like to rush into building a business plan or recruiting the team. I like to wait a few weeks, [to] see which ideas really stick with me.’ So, before diving headfirst into the market, give your ideas time to germinate.
4. Run the idea past some critics
Perhaps the most important part of validating any business idea is the invitation of criticism. Too many entrepreneurs get so fixated on their idea that they are deaf to criticism in the early stages of the business. Surround yourself with people that will give you brutally honest feedback and have them assess the product as a potential investor or customer might.
Taking the product outside of your closed circle, it’s important to perform market research with a group (at least 50 people) you know to be difficult customers. Put together a short survey to get an idea of the kind of person you’re introducing to the product, otherwise politeness and a lack of a critical eye could give you a vastly inflated view of your idea.
5. Test a landing page
Once all of this has been done, it’s time to launch a website and assess the performance of the landing page. Market testing your website’s conversion rate will give you a decent idea of the sort of numbers you can expect going forward, and whether or not they’re promising enough to sustain the business. In the early stages, it can be helpful to direct potential customers to a simplified landing page, with a brief description of the product and an invitation to hand over an email address. With these potential users on a waiting list, you can ensure that you have promising leads before the business is even launched.