Validating Business Idea

For any startup the crucial first step is Validating Business ideas. Ideas are plenty and a structured process can be used to validate the idea before  precious resources can be committed. ...

Validating Business Idea-Quote

"Ideas are meant to be attacked, torn apart, and put back together again. You may well want to shield your idea from the harsh sunlight at first, but by the time it’s ready to meet the world, it should also be ready for rain or shine."- David H. Hansson with 37 Signals

“Why do so many founders build things no one wants?" he asked. "Because they begin by trying to think of startup ideas. That method is doubly dangerous: it doesn't merely yield few good ideas; it yields bad ideas that sound plausible enough to fool you into working on them.”- Paul Graham

Validating Business Idea-Common Sense Principles

Ø  Validate how and not why part of it

Ø  Do not fall in love with your assumptions

Ø  Do not go by opinion of close friends and relatives only

Ø  If the feedback is not favorable drop the idea, modify the idea or look for another idea

Ø  Before starting describe the profile of your ideal Customer

Ø  Practice the pitch 30-90 seconds before you connect with any potential lead

Validating Business Idea-Options for Testing Ideas

Image Source: stuartmiles-freedigitalphotos

Ideas are plentiful, an idea means very little in this world, what matters is building and scaling and persevering.

     Post your ideas on Quora and seek opinion

     Focus Groups

     Post the idea in Social Media

      Build Minimum Viable Product if a product is required

     List the pain points being solved

     Use your network

     You can join networks like Lions Club, Rotary or BNI

Maybe you’re saying, “But Alli.  I don’t want to put my idea “out there.” Someone might steal it!” Well, I never worry about putting my ideas out there, nothing is new under the sun.  It's not the idea, it's the execution of the idea.

Validating Business Idea-What Constitutes Validation

(Source: Mike Kawula)

 Uses the term avatar to describe your ideal customer. 

The best form of validation of an idea is currency.  Remember:

“If your business isn’t generating any revenue it is just a hobby”

Currency could be in the form of a deposit or fully pre-paying for your product or service.  

Other actions could be receiving an email address indicating they want to be notified, a phone number, mailing address or even someone taking time to complete a survey.

 An Example of Validation

A woman entrepreneur wanted to test her idea for homemade chocolates. She lives in a huge housing complex where she has lot of friends. She supplied chocolates for childrens’ birthdays which she and her children attended.

She also participated in exhibitions which mainly attracting youth .

The word of mouth publicity increased her orders. Later, she went for online sales within a local delivery area of 2 kilometers.

At the end of one-year period the business  operations have to be shifted  to a larger area  where she hired more employees to cater to the growing business.

Validating Business Idea-Recommended Book

Startup Idea Action Plan- Ryan Mulvihill

Startup Idea Action Plan- Ryan Mulvihill

Validate your startup and get customers in 7 days-When all you have is business idea

May be this book will help you to decide whether there is somebody out there to pay for your idea.

Validating Business Idea-Conclusion

The good thing about validating an entrepreneurial idea is, it helps you create a better product or service based on the feedback you receive from your avatar. If your idea is invalidated by your avatars, you’ll also save yourself a tremendous amount of time and money. This process alone may not guarantee success but it helps in improving the chances of success. After all 70% businesses fail at the end of one year.

For radical ideas customer survey may not work. It pays to blaze your own trail. Like Henry Ford said about customer survey that if he had asked them he would have got an answer ‘faster horses’.

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