How to Validate Your Business Idea without Anyone Stealing It
How to validate the business idea to become 100% sure that you will succeed?
Why should you validate a business idea?
When you are exploring new business or product concepts, it is important to test your ideas early.
If you validate a business idea first, then you will not have any reasons (aka excuses) that your new venture will fail.
Most clients I;ve worked with have an endless supply of ideas. But, they keep these ideas to themselves. They are scared that if anyone hears about their business idea, they will use it to create their own company and will succeed based on their idea.
I’m here to tell you that If you keep your ideas only to yourself, you will most likely not validate them.
Here’s a guide to start with practical steps you will need to take to validate your business idea.
1. Market validation
Market validation is the first step and if your idea passes at this step, you can continue to the next.
The purpose of the market validation step is to find the answers to the following questions:
Is there a market for your business idea?
If there is a market for your product or service, is it large enough?
Is the market starving for the solution to the problem your product or service will solve?
Are they willing to pay for the solution? and importantly do they have the money to pay for the solution?
Use Google Trends to research and validate the business idea
Start with Google Trends to see what’s the trend for people searching for a solution that your business idea will deliver for them.
Google Trends is based on Google Search and shows how often a particular search term is used by real people when they search something on Google relative to the total search-volume across various regions of the world, and in various languages.
Here’s an example
Let’s say that we will base our product on “digital marketing”. I’ll go to Google Trends and type in the search term “digital marketing”. Here are the results.
As you can see, we have a growth trend according to Google Searches.
Congratulation, you come to an important fact when you validate a business idea!
But, I want to be more specific because I want to set up my Digital Marketing business in New York or target my services to Small Business owners. So, let compare these two terms in Google Trends.
As you can see from the results, Digital Marketing Small Business is more popular than Digital Marketing New York. This result is an additional sign that there is a market for Digital Marketing Services for Small Business as well as a Location, but the demand for Digital Marketing Small Business is higher than Digital Marketing New York.
You can dig deeper by analyzing the interest by regions, or cities, or look at related rising queries. Simply scroll down the page to get an understanding.
Use Google Keyword Planner to research and validate
Continue your research for market validation of your business by using the Google Keyword Planner tool to check some more details about our two most important keywords: Digital Marketing Small Business and Digital Marketing New York.
Go to Google Keyword Planner and search for new keywords using the phrase, website or category.
Next, you will need to put your keywords and click “Get Ideas.” The results I get for my “Digital Marketing” business idea is the following:
As you can see, “digital marketing small business” has ten times more searches than “digital marketing new york”. This result is a great sign for our purpose because we are in the stage of market validation.
If there was no competition, maybe there is not a market for such a service. Look at the “top of page bid low range” column, you can see that digital marketing small business has a higher suggested bid, so companies pay more for advertising of digital marketing small business than digital marketing new york.
Again, this result is an additional sign that we have a market for both.
Continue with this type of research until you find what Ryan Levesque, who wrote the book ASK method, calls your “bulls-eye keyword”.
Create a survey with Google Forms
You’ve collected many interesting answers and completed some analysis.
Now it’s time to go one step further to start gathering information directly from potential customers who are actively looking for these types of services on the market. The best way to do this is to use a survey.
Log in to your Google account and open Google Forms.
You can now start creating your survey using recommendations that I will share with you below.
The purpose of your survey is to
- validate the market,
- the possible size of the market,
- the presence of starving potential customers for the solution and
- their willingness to pay for your solution.
Structure your survey in two parts.
Part 1: Is about the market and potential customers. Your purpose, with these questions, is to identify your market more accurately to be able to segment your audience. You will ask questions like:
- Describe yourself concerning (market, problem, solution)?
- What’s is your profession?
Part 2: Use open-ended questions in the survey when it comes to describing the problem and possible solutions.
- What’s your single biggest challenge/frustration with XXXXXXX?
- How do you currently solve this problem?
- Are you currently searching for a solution that will solve this problem?
- What does the solution need to give you to pay for it?
- How much will you pay for the solution and why?
- How much will you pay for the partial solution and why?
Now send the form to potential customers. f you have an email list send the survey to them.
At this stage, there is no need to have a hundred thousand answers, but you will need to have enough potential customers to make the right decision. Depending on the product or service you are validating, and the target market, the target number of answered surveys can be between 100 to 500.
If you prove that the market is big enough, with potential customers that are starving for your solution and are willing to pay you for it, then your business idea has passed the market validation process.
2. Idea validation
Your solution is only in your head as a possible business idea at this point. So, you don’t have a product or a service to offer to the market, and you haven’t designed or built anything yet.
At this stage of the process, you want to be sure that it is worth spending time, money, and effort. Additionally to go to the next step and design and build a minimum viable product or service.
Set up a Landing Page
Start with a simple landing page. But, before you start building a landing page, translate the features of your product or service into your ideal customer’s benefits. Using these benefits you can start making your overall offer.
Make sure your landing page has the following:
- Complete offer with the benefit to the customer;
- Order form, subscription form, or phone number that prospects so that visitors to the page can take the first action.
Your goal is to measure and check if there is enough interest and the best way to the interest will be the conversion rate. You can calculate the conversion rate as follows:
Conversion rate = total number of visitors/number of visitors that take an action
For example, if you have 1000 visitors to the landing page, and 50 of them ordered your product or subscribed to your list to receive the information when they can buy the product, or call you on the phone, your conversion rate will be 30/1000 = 0.03 or 3%.
The larger the number the higher the potential your business idea will have.
If your conversion rate is not up to scratch go back and improve the offer.
If you use pay-per-click ads, you can quickly calculate how much cost you will have per one potential customer. So, you slowly build your product and connect different dots related to marketing and sales.
The second test at this step is to interview your customers. But, the interview will be face to face.
Your goal with the interview is to check would your potential customer buy the solution from you.
In many cases, they will not tell you directly that they will not buy from you. So, your job will be to analyze their non-verbal communication while you explain to them your product/service concept.
Your role is to improve the product/service concept.
3. Product validation
The product or service validation step is the last step in the process when you become 100%confident that the idea will succeed.
You are already confident that there is
- enough market for your product/service.
- People are starving for the solution and willing to pay you.
- You are confident that there is enough interest for a potential product.
You now need to acquire early adopters for your minimum viable product (MVP) through different forms of teasing.
You already have surveyed potential customers or potential customers with whom you have talked in person in the previous step. It’s important before you launch your MVP to have a critical mass of testers and early adopters. You enough feedback to validate your MVP.
It’s important to ask for payment on day one when you launch your MVP. This will help you analyze your pricing model and will give you feedback if you need to change something or not.
What to include in your MVP
At this step, you will need to build an MVP (Minimum Viable Product). MVP is the smallest thing you can make to start the validation of the product.
You need to check all the information that you have collected from the previous two steps through analysis, surveys, and interviews.
The purpose is to use this analysis to decide what features to include in your first MVP and what need to contain your total offer. Cut everything out that proved it would not bring substantial value to the customers.
You want to a positive response from customers at this step when you validate the business idea.
You have invested time and effort in the whole process, and you don’t want to lose that at the end.
Have your customers paid for and used your product (MVP)?
Check if customers buy your product or service or they are only interested in a solution, but not ready to buy yet.
Pre-selling as a way to validate the product and is an excellent method to gain experience for more successful launches that you will use when you validate the business idea.
You should also measure how your customers use the product or service as an MVP at this step.
- How much time do they spend on your product or service?
- How they use and are they satisfied with your product or service?
- Are they using all features or only some of them?
- What results are they getting after using your product or service?
When you come to the final MVP that has passed your customer’s control, you have a validated business idea. You are now ready for the Start-Up phase of your business.
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