Coming up with a business idea is hard, but it’s even harder to validate!
You don’t want to spend time and money on an idea that will never get off the ground.
In this post, I will cover some simple ways to validate your business idea.
Table of content
- Who is your customer and what is the problem you are solving?
- Consider your competitors
- What makes your idea unique?
- What is the size of your market?
- Is your idea feasible?
Who is your customer and what is the problem you are solving?
Before you begin validating your idea, start by jotting down the idea. This will be the foundation for understanding how to validate your business idea.
Think about the job to be done – The job to be done framework is a great way to try and understand the problem you are trying to solve and for whom. Talk to your potential customers and understand their current journey and pain points. What would they like help with now that your product or service can help with?
For example, let’s say you want to start a business for hiring electric bikes. What problem does your product solve:
- Make it easier for tourists to get around?
- Help food delivery drivers economically and efficiently earn their income?
- Or maybe for students to commute to university and surrounds?
Consider your competitors
The important part with considering competitors is not to stop at the obvious. For the electric bike business, if your business is for tourists, think about what other solutions tourists have access to – this could be a hop-on hop-off bus tour, an electric scooter hire business, local walking tours, bike tours etc..
Similarly, for hiring to students, this could be students buying used bikes of Gumtree, using Afterpay to pay for new bikes in installments, hiring electric scooters, local buses etc..
As you can tell from the above, depending upon your intended audience and their job-to-be-done your competitors change dramatically.
What makes your idea unique?
Have a look at the competition and try to write down what is your unique value proposition. Remember, the value you are offering has to be not just a small change, but, a large leap for people to leave their tool of choice.
If your market is hiring bikes to students, this could be including yearly bike servicing or providing a rent-to-own option.
What is the size of your market?
Once you have determined your customers, try and understand the potential size of your audience. If we take the students example, this is not just determining the number of students in the area.
You have to try and understand how many live in a bike friendly distance from the university and would be keen to ride a bike. One common way to do this is by quantitative tools like surveys. You might have to offer a prize for participants to entice them to fill your survey but it will be cheaper than building a product and then realising the product you have built does not meet market needs. You can also collect emails during surveys and reach out to the same audience when you have your product ready.
Is your idea feasible?
A lot of people have great business ideas, but most of them are not feasible. Think about technical feasibility and financial feasibility.
A lot of technical feasibility can be overcome by finding the right technical founder. But sometimes, it could be the technology is not ready or it will be too costly to build the right product.
Consider, what is the easiest way to test your idea. Before you go building anything, think about what is a small step you can take to test your idea. As an example, this could be setting up a Gumtree account, listing e-bikes for hire in your area and testing how much enquiry you get. Similarly, look for interest in your area already for electric bikes and what prices people are willing to pay. Also look at what they are paying for alternatives to your solution, such as buying a bike using Afterpay or a hop-on hop-off bus.
Another common way is to build and market a landing page that talks about the benefits of your product and request people to join a waitlist to be part of the program. You can also use different landing pages to test what features appeal to your market and attract more sign-ups.
No matter what type of business you are starting, it is important to validate your idea before you make any major commitments.
A business can spend months, years, or even decades working towards achieving their goals. To make sure your idea is worth the time and effort, make sure you’ve answered these questions before you get started.
Article written by Sherol Singh, founder of Keep Active