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Business Validation: Efficiency & Potential Before the Market Launch 3 Business Validation: Efficiency & Potential Before the Market Launch
Review: 5 - Business Validation: Efficiency & Potential Before the Market Launch

Business development is always associated with certain risks. In the first year of functioning, most startups are closing. This happens due to the lack of demand for their product. No wonder to neglect business validation often means to doom it to fail.

This article will learn what validation is and how to do it in seven easy steps.

What is Idea Validation?

First, revise what’s that. Then – quickly answer the question: How to validate business ideas? In the end, follow the steps to complete the task. Voila!

So, to reduce the likelihood of failure, you need to validate the project idea before everything and create an MVP.

After testing your idea, you’re going to:

  • understand your market better

Study the current situation in the industry and, perhaps, you will see a clear vector on what the product should be there;

  • reduce the risk of losing resources

Testing the idea and launching an MVP is the most budget-friendly way to test the viability of your business at a primary stage. And thus, another way to avoid severe mistakes in the future. We all know that.

7 Steps to Determine Business Idea Validation

According to a CB Insights study, 42% of startups failed because the product they created was of no use to anyone. Carried away by their incredible idea, the founders solved exciting problems, but not for their audience who made their market potential, but their own.

Since the primary goal of creating a startup is making a product that people need, it’s essential to meet and anticipate their expectations and turn out a commercial success at the same time.

You can check the market demand for a particular product through validation. At the same time, this is a critical stage for the projects that are at the pre-seed stage of their implementation.

 

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Idea validation checklist illustrated by Fireart

Analyze the Market and Demand of People

Highlight the problem first to validate the business idea. Based on that list, the pool of socially pressing issues needs to be addressed here and now to analyze if there are people with the same problems out there on the market you will enter.

Describe a portrait of a potential client. You shouldn’t try to cover the entire market at once. Imagine exactly who the ideal customer is. Further, as your startup scales, you will be able to reach a wider audience.

Choose the Low Competition Business Sphere

Regardless of whether you have competitors, focus on what qualities of the product will be appreciated by users. You may get into the low competition environment that gives you greater chances for success. If you enter an existing market of high competition, write down a list of properties and benefits that will qualitatively distinguish your company from its peers.

Rate your Financial Opportunities and Possible Profits

It sometimes happens that even a growing company may not be earning any profits yet, but may nevertheless provide an excellent opportunity for investments. Your start-up may need the same. You need to previously estimate your startup profitability and possible prospects before you launch it into the market.

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Social Media Analytics App design, Source: Dribbble

Get Feedback from People you Trust

The primary purpose of validation is to provide evidence that the market needs a particular product. Create a minimum list of clear and measurable goals that you would like to achieve before the end of the study. When you are through with the preparation, ask for feedback from people you may trust and rely on in financial matters. Not mentioning prepaid consulting that may define your business s plan gaps and help to fill them in.

Validate Business Idea through Customers Interviews

Form a list of hypotheses. Any idea is a set of assumptions, such as “taxi drivers are more comfortable using a mobile application than a telephone service.” Or “students want to share their thoughts in a short 140-character format” or “young moms have not enough time for housework, etc.” When you get them, then you may interview your potential users and check them for real.

Build an MVP (Minimum Viable Product)

When all is ok after the preliminary estimation, you may pass over to building your first MVP or a prototype. You may create a web page for a future project with a form for collecting information about the interested users, conduct a large-scale distribution of a questionnaire, organize interviews or create an MVP product straight.

As a result, you will collect feedback from potential consumers. These can be direct reviews or expectations from a future product, as well as its first QAs.

Create and Test your Business Idea

So, your validation in business is complete and may be tested in various ways. If we are talking about the minimum viable product, including the minimum possible, verified set of functions, you should make minimum QA while using it for the first time. Practically, it’s your first users that often notice and point out the first product drawbacks that are to be eliminated.

It is worthy to consider the following things:

This is the expected and logical scenario for the further development of the project. At the same time, it is good to start pre-sales of the product already at the stage of its development.

  • Use responsive design

Remember to be responsive. Society is changing, and business must also change. Adjust the idea and project to the realities of the surrounding world. Sometimes it may even be necessary to abandon hypotheses or radically change the approach to creating a product to a user-centric, for example.

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UX/UI design sample by Fireart Studio
  • Consider the experiences of other entrepreneurs

Pay attention to the cases of other companies on how to validate your business idea, analyze their mistakes and successful solutions. So, you will get the opportunity to learn and improve your business skills.

Validation will help avoid sudden failure, but it will not eliminate all the problems that founders face in project development. At the same time, you will at least study the market in detail and gain

Track the Activity and Dynamics of Your Business

Does your organization keep notes of activities?  If not – you should fix that because measuring is essential even for early startups. Keeping track of all your success & failures will help to improve the product and dwell on your business in the future faster. It will be easier to scale it or prevent risks. Finally, your marketing will rely on the materials to accumulate for good.

Conclusion

Why do I need to validate business ideas is a good question for every business newborn. Your task as an entrepreneur is always to save your limited resources – time and money and create a solution that is useful to people. So that to make it one hit one shut while creating your product, validate your business idea.

Validation is very important for startups because before they waste their enthusiasm, time, and money, they need to be sure that the idea was worth it. Make sure it’s of real demand, and not only in your imagination. Use validation steps and ask for advice from someone keen on related issues. Share your knowledge and ask for feedback, never be afraid to fail, because it’s quite normal.

Don’t take failure too close to the heart. It can be difficult to refuse your hypotheses and realize that developing a product will be completely unprofitable. If the idea doesn’t pass the test, it’s better to take it as a valuable experience and move on to validating another startup.

Our team may easily highlight several main nuances that should not be forgotten both during the validation of an idea and after it. We’ll painstakingly review every offer and crave a tailor-made solution.


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