Key takeaways
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- When you validate a business idea, you compile evidence showing that your product has a place in the market and can earn money.
- It’s important to generate an idea you think is worthwhile before validating it to save time.
- Validating a business idea involves 5 steps: writing down goals, conducting narrow qualitative research, reaching out to a broader target audience, testing the idea with a “Wizard of Oz” type product, and creating an MVP.
- After business idea validation, you can either perfect your idea, stop pursuing it, or scale it.
Validating a business idea — what does it mean?
Validating a business idea is a crucial step that ensures the viability of your startup, and can save a lot of time, money, and effort. By validating your business idea, you’ll find out whether your product is valuable and has the potential to generate revenue, or you shouldn’t waste your money on it at all.
Business idea validation can help you hit two birds with one stone:
Ensure sufficient market demand. Market validation helps determine whether you have a genuine issue that needs solving. Additionally, market validation shows if potential customers are interested in your product and whether they can afford it.
Scope out the competition. Idea and market validation can help grasp how much of it is currently occupied by your competitors, both directly and indirectly. Also, you can assess their overall strengths and weaknesses, which will let you know what strategies “to steal” to make your business model, marketing offers, or features better.
Overall, we suggest you validate your business idea as early as possible to gain maximum benefit. You’ll get insights as to whether your product can actually fulfill your customers’ needs. If it can’t, you’ll have plenty of time to correct the course.
Find a business idea first, validate it second
Brainstorming ideas is fine, but spending too much time on it can be counterproductive. If you focus on it for too long, any idea may start to feel lackluster, falling short of an “aha!” moment. An entrepreneur who gets bogged down in the details risks losing motivation and giving up altogether, — jumping right in without having a defined idea isn’t wise, either.
To have a balanced approach and find an appropriate idea, here are three solid actions you could take:
Talk to potential customers
If you have a clear niche in mind but aren’t sure where to go next, identify your potential target market and talk to them directly. Figure out their pain points, this way, it’s easier to develop a valuable idea that addresses their specific needs.
As you get to know your potential clients, try to understand their desires, frustrations, and daily routines. Look for connections between the issues they encounter and the features your product could offer to resolve them.
As you gather feedback, you’ll probably notice that your respondents keep repeating the same ideas and concerns. Keep the problems they’re sharing in mind to improve your business idea or get a new one.
Many entrepreneurs worry that their ideas might be stolen. The reality is that execution matters more than ideas. Even if someone else were to steal yours, the chances of them replicating your passion and commitment are slim.
Conduct quantitative market research
Conduct and disseminate surveys to see if there are enough people who face the problem you want to solve. Look for recurring themes in the responses, but it’s not about getting into the details. Instead, focus on judging the scale of the problem. Also, try to identify patterns to understand how many people could benefit from your product or service.
In this case, it’s a numbers game. Be honest with yourself: if the majority of respondents from your target market say they don’t experience the problem you’re addressing, trust them and figure out how to course-correct them.
Also, while conducting these survey interviews, you can just stumble on a new niche in the market that will be more profitable. In our case, we saved our client $150,000 with a project discovery and found a new niche his potential customers had problems with.
Figure out pain points to make your idea more concrete
One of the best sources of feedback for your product is yourself. Especially if you’re creating something to solve your own problem or “scratch your own itch.” Many successful startups begin as solutions to issues their founders have faced while also filling a genuine gap in the market. Be honest with yourself, reflect on your experiences, and use those insights to develop a strong product.
Once you’ve done the work, here are some things that could help you understand whether the business idea is worth validating:
Your idea doesn’t have to be groundbreaking. You can start by addressing a niche and later expand your app or idea to reach a larger audience.
5 steps to validate a business idea
Let’s say you have an idea that you think is decent enough. It’s only half the battle, as ensuring it’s valid is important. Here are 5 steps to propel you closer to your goals and conduct market validation.
1. Write down business hypotheses and market validation goals
At this stage, it’s crucial to develop a clear and actionable plan. Start by formulating some key hypotheses to test.
Consider whether potential users would be willing to pay a specific amount for your app, and if enough clients are facing the same issue you want to solve.
Reflect on the value your product offers, identify your target market, and highlight your unique selling points. By clarifying these aspects, you ensure that your efforts will be rewarded and that you get a solution that resonates with your users.
2. Conduct qualitative market research
Now is the perfect moment to connect with your potential clients. Networking is crucial here, so reach out to people directly: organize a Zoom call with your potential users and present them with your idea. If you’re developing a product in an industry you already have experience in, this step will be much easier.
Start by preparing some assumptions about the problems your potential customers face. To test these ideas, reach out to about 15 to 20 people who experience similar challenges. Schedule short interviews — 15-minute calls will suffice.
If you don’t have an app yet, walk your potential users through the app verbally, or, better yet, show a presentation to showcase the value of your product.
Use their feedback to gain insights into their daily challenges. This way, it’s easy to conduct market validation and determine whether your product can address your users’ needs effectively.
In the end, circle back on your assumptions about your target audience. Compare them with the insights you’ve gathered from your conversations. It will help you understand whether these initial ideas align with the experiences of your potential customers. You can use this info to refine your product and approach later.
3. Get feedback and conduct broader qualitative market research
So you’ve received initial feedback from your immediate circle. Now, it’s time to reach out to even more people.
- Use insights from your first round of reviews to refine your idea, considering the desires, needs, and real problems expressed by your initial respondents. This process could reveal that some of your earlier assumptions were wrong, but that’s generally a good outcome. It’s an ample opportunity for improvement.
- Expand your research pool. It’s essential because it lets you interview people unfamiliar with you or your product. They’ll likely be brutally honest with feedback without sugar-coating it or relaying imaginary problems. This can highlight issues you may not have considered.
You can find potential respondents at industry events, in social media groups, or through various online forums. Their diverse perspectives will help you gain a clearer understanding of your target audience → create a better app in the long run.
4. Start small with testing your business idea: use the “Wizard of Oz” method
Now that you have all this data at your disposal, it’s time to turn it into a bare-bones app version you could test. In this regard, “Wizard of Oz” is a great method to begin with.
“Wizard of Oz” is a testing method where clients believe they’re using a fully developed product, but in reality, everything is done manually behind the scenes. This approach allows you to see how people interact with the product → the resulting data will help you refine the “app” that doesn’t yet exist.
An example of this method in action that comes to mind is ZeroCater, a food service company that started with a manual-first approach.
Initially, ZeroCater used a simple spreadsheet to keep track of office teams and manually ordered food from local restaurants. Now, ZeroCater is an all-inclusive service with personalized menus and hand-crafted meals.
Create an MVP to gain even more feedback and release faster
If your “Wizard of Oz” testing has been successful, consider creating an MVP. This way, you’ll see how your app performs in a real setting with a limited budget.
MVPs have several benefits:
Check whether the app is viable “in the wild.” Some years ago, an owner of a vet clinic in Germany contacted us with an idea for a pet health tracker app. She wanted to test her concept on a limited budget, so we focused on the most essential features. As a result, we released an MVP called PetBuddy: it gained over 5,000 downloads, which is really impressive for a niche MVP.
The MVP took us 3 months to complete and cost $30,000 to make.
Raise funds easily. To attract investments, it’s important to showcase your product convincingly. Investors are hard to sway with beautiful designs and promises of wealth alone. Instead, it’s better to demonstrate a functioning app with real users, i.e., an MVP.
Gather even more feedback. Interviews, “Wizard of Oz” type testing, and other methods in a controlled environment are great at first, but they won’t tell the whole story about your users and their interests. Releasing an MVP grants you access to real reviews from your clients, which is highly valuable. It’s one of the best ways to get real advice on how to improve your app.
What to do after business idea validation
After you’ve validated your idea (preferably by releasing an MVP), you have three choices you could make.
Perfect your startup idea
Start by shifting your focus to the most impactful features that directly address user needs:
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- Enhance your key features — the ones that differentiate you from your competitors. Ensure that all user interactions are smooth and fast to satisfy as many clients as you can.
- Narrow down the number of features to streamline development. Engage with your target audience to determine what they need and what you could omit. In the long run, this can make development cheaper and faster.
Stop pursuing the idea if it isn’t worthwhile
Found out that the startup idea isn’t viable along the way? If initial research and feedback reveal that the concept lacks market demand, is financially unfeasible, or fails to solve a significant problem, you could pivot to a different startup idea altogether.
Continuing to invest resources in a flawed concept can lead to wasted time and capital. It’s better to redirect your efforts toward better opportunities. In any case, being adaptable is key to good entrepreneurship and eventual startup success.
Scale your MVP if the results were successful
Once you’ve generated revenue and received investments from your backers, it’s time to grow your startup and MVP. Update your features based on user feedback, reach for a broader market and target audience, and try optimizing your work processes.
As you prepare to welcome more users into your app, consider possible technical or business-related limitations. Create a strategy you could follow to enhance your MVP and turn it into a successful product.
So, to summarize
In this article, we’ve discussed the importance of business idea validation. The most surefire way to do that is creating an MVP.
If you want to create your own MVP to test the feasibility of your idea — contact us at Purrweb. We’d love to make your vision a reality. Our specialists have been doing just that for many founders all over the world.
You can check out some of the work we’ve done over 10 years here. It includes apps in niches ranging from healthcare, IoT, and eCommerce to social media and fintech.
Use the form below to reach out: we’ll hear you out on your concept and provide you with a price estimate.
