How to Validate Your Business Idea

A series of lightbulbs with checkmarks. Represents checking if your business idea will work.
Author: Kody Wirth

Kody Wirth

Kody Wirth

4 min. read

Updated May 10, 2024

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 all you need is a one-page plan to do it.

Dig Deeper: How to go beyond the napkin

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.

Dig Deeper: How do you know if you have a good business idea?

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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.

Dig Deeper: 6 idea validation tactics worth trying

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.

Dig Deeper: How to find beta testers

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.

Dig Deeper: How to make the most of customer feedback

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.

Dig Deeper: How to validate your eCommerce product idea

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.

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? 

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.

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Create a professional business plan

Using AI and step-by-step instructions

Create Your Plan

Secure funding

Validate ideas

Build a strategy

Content Author: Kody Wirth

Kody Wirth is a content writer and SEO specialist for Palo Alto Software—the creator's of Bplans and LivePlan. He has 3+ years experience covering small business topics and runs a part-time content writing service in his spare time.