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How to Validate Your Business Idea
Kody Wirth | Oct 29, 2023
You have an idea. You’re excited by its potential and eager to make it a business.
But don’t pour your money into it just yet.
You must answer this crucial question—will people buy your product/service?
Not sure? Then you need to validate if there’s a market for your idea.
What does it mean to validate your business idea?
Idea validation is testing the need for your product/service in the market.
It should tell you if people are likely to purchase and if your idea can be profitable.
Validating your idea mitigates early risks. You gain insights into potential challenges and market receptivity before investing significant time or resources. You’ll avoid making a product that lacks market fit.
And if there is a fit—use the process to refine your idea to better meet customer needs.
5 steps to validate your business idea
Determine if your startup idea works by following these simple steps.
1. Expand on your idea
You need to formalize your idea. Take it from a passing thought or scribbles on a napkin to an outline of how it works as a business. And you can use a one-page business plan to do it.
2. Determine if you have a good idea
Not every business idea is a winner. It may look good on paper but lacks qualities that allow your new business to grow. Learn how to identify those traits and determine if your idea is actually good.
3. Conduct customer research
You can’t just assume that people will like your idea. Sure, you should have data to support that theory. To be certain, you need to get out and talk to people. Here are six ways to do that.
4. Test your product or service
Conversations with your target audience should do two things—verify your idea works and provide valuable feedback on the product or service. Now, you just need to test it with actual users.
5. Review and apply customer feedback
It’s not enough to collect feedback, you need to use it. While we can’t tell you exactly how, try following a framework of categorizing the feedback, sharing it with your team, and requesting a follow-up.
Bonus: Five things to do if you have an eCommerce idea
Following the above process will help you validate an eCommerce product or service. But there are more specific steps you can take to fully vet your idea online.
How to prepare a product or service for testing
What does it take to test a product or service idea with paying customers? Let’s introduce you to the concept of minimum viable product (MVP) and how to build products for testing.
MVP vs. minimum lovable product (MLP)
The MVP is your bare-bones attempt to turn an idea into a business. But you can’t stop there. You need to go further and turn it into something your customers love.
Tools to help design your product
Are you unfamiliar with building products? Check out our books, courses, and tools to help you go from product concept to a testable MVP.
What to do after validating a business idea
Your idea solves a real-world problem, works as a business, and interests potential customers. You appear to have market validation—so what now?
Protect your business idea
You don’t own your idea. So, how do you keep it safe? Learn what legal protections are available and how to start discussing your idea without giving it away.
You have an idea but no funding—now what?
You need capital to turn your idea into a business. While there are other necessary steps in the startup process, these four will fast-track you to pursue funding.
How to move on if your business idea fails
Following the idea validation process does not guarantee success. So, what do you do if your idea fails? Get back to basics and solve a problem.
Dig deeper with market research
Validating your business idea will set you up for success or help you avoid something destined for failure.
By the end, you will know far more about your business, the market you’re entering, and, most importantly—your customers.
But your research shouldn’t stop at validation. You need to dig deeper and fully define who your customers are, what they want, how they work, and your relationship with them.
Click here for the next step in your startup journey—conducting market research.
Business idea validation tools and resources
Simplify the idea validation process with these templates and tools.
Business idea validation checklist
Want to find out if your business idea is a winner? Work through this checklist to test it.
One-page business plan template
Document your research, explore the specifics of your idea, and outline how it could work as a business.