How to prove your business idea will work
So you have an awesome business idea – congratulations! But before you plough all of your money time and effort into it – how can you be sure this idea will work? This is how to validate your business idea and will help persuade not only yourself but also investors, friends and future employees, that you’re onto a winner.
Check it’s original
First things first, do a search for your idea to ensure that nobody else has gotten there before you. This can be as simple as some extensive Googling and searching around on social media – but remember to go beyond the front page.
Don’t worry if there are similar products out there already – this means that there’s a demand for your product. But ensure that you’re offering something that they’re not.
How to prove there are customers willing to pay you
Set up a free landing page (use striking.ly or Launchrock) that gives a bit of information about your product, and says something like ‘Coming soon’ or ‘In development’. Using Google Analytics or similar, you can then see how many people are visiting this page – or even better, you can create a sign-up form using Wufoo asking people to leave their email address if they would like more information, or to be notified when you launch. If you get a lot of interest, it will prove that people are interested in your idea.
Another way to research is to send out a survey, using a tool such as Surveymonkey. Send it out to everyone you know, and get it shared as much as possible. Ask the right questions about whether people would buy your product, do they like the name, how much would they pay for it, etc. If you get a good response it shows people are engaged with your idea and will also help shape your final offering.
Find a mentor
Objective advice from an experienced entrepreneur or expert can really help give you some clarity on whether or not your business is viable. Mentors can help you see any pitfalls that you might not have thought of, or show you that the dazzling light of your enthusiasm for your idea might actually be blinding you from good judgement. They are the perfect people to bounce ideas around – as well as giving advice on more practical aspects, such as cashflow.
We’re really proud of our mentoring system at Virgin Startup. Everyone who receives a loan also gets matched with the perfect business mentor for them. But if you’re not after funding, then simply just ask someone you think would make a good mentor, chances are they will say yes. People are flattered when you position them as an expert and ask for advice – don’t be afraid.
Build a business plan
Logistics are an important part of validating your business idea. You need to think about how much profit you’re likely to make, and when you’ll start making this profit. You need to think about costs, and suppliers, sourcing materials and where you’ll find the most precious resource of all (time!)
Our business plan template talks you through every step of the way, asking the questions that need to be answered about cashflow, setting up, pricing, and your business’s unique selling points. Answer every question in this document and you’ll have an investor-ready business plan.
Build a MVP
Building a minimum viable product and offering it to a beta audience is a fantastic way to get real-world feedback on your product or service. You can find out how much people are willing to pay for it, find out about the features they’d like to see or the ones that are unnecessary, and generally find out how your product or service would work in practice. It doesn’t have to be perfect right off the bat –but tailoring it to your customer feedback can be better than working on a ‘perfect’ product only to find it’s not what your audience wants. This means you don’t need your offering to be perfect - get a first version out there and tweak it as you learn from your first batch of customers.
One way to validate your idea that’s increasing in popularity is crowdfunding. If members of the general public are willing to open their wallet to support your idea, it both confirms that your idea is a winner and can also help win alternative investment down the line. If the crowd back your idea, then that’s customers saying it will work and that you’re onto a winner.
It can be tempting to keep your fantastic idea under wraps out of fear of somebody stealing it. However, it’s vital to ensure that you do tell people about it in order to validate it. If you keep it under wraps you’ll miss out on opportunities to improve it, to publicise it pre-launch and drum up hype, and to find out whether people are actually willing to buy it.
Let’s be brutally honest here: even though your idea might be absolutely fantastic and you’re positive it’s completely original, someone else probably has had a similar one at some point. The proof is in the execution of the idea. And if you don’t validate your idea, discovering in the process how to turn it into the best possible product or service, then you won’t be doing it justice.
Image source: Flickr Creative Commons