Why And How You Should Validate Your Business Ideas
This post will take 9 minutes to read.
There are many times that we come up with great product ideas or even new features. Then, we spend time and money to create them only to have no one want it or want to pay for it when we are ready to start selling our new product. Many people will tell you that you should validate your ideas. Why should we validate them? What if we want to validate the idea but we don’t know how to even begin? In this post, I am going to walk you through the why’s, the what’s, and the how’s so you can validate your ideas before wasting time and money.
Why Should You Validate Your Ideas?
There are a variety of reasons that you should validate your ideas before creating the product. If you are creating your product yourself, it could take you hundreds of hours to create the product. What if, after all those hours, you finish the product and no one wants to buy it? Or, maybe you hired someone to create the product. Now, you would have wasted thousands of dollars or more. Another benefit to validating your idea is that you can talk to potential customers and begin marketing your product before you even build it. When it comes to your product idea, there are three things that you should validate.
Validating The Market
The first thing that you need to do is to validate the market itself. Is there a market for this type of product? You want to make sure that there is not only a market but a market that can scale as well. If you only quickly validate your idea with a few potential users, you may not realize that there isn’t enough of a market to grow your product. Are there competitors in the market? Are they successful?
Validate The Problem
Once you ensure that there is a market and it can scale, you need to validate the problem that you are trying to solve. Is this an actual problem? Do other people have this problem? For example, if you dislike the way a social network handles displaying friend’s posts, you would want to make sure other people have those same dislikes as you before you create the new social network. Similarly, if you have a problem keeping track of time spent on projects and that current time-tracking tools are too complicated, then you want to make sure there are other people that also have that problem before proceeding with creating your product.
Validate That People Will Pay
The last thing that you must validate is that people will actually pay for your product. There may be people out there interested in your product. They may have the same exact problem as you think they do. However, if they do not want to pay for your product, it doesn’t matter. The best way to validate a product is to ask for a potential customer’s money. Knowing that you potential customer would be willing to pay for this product ensures that you will have customers willing to pay when the product launches. Not doing this final step could lead to a product launch that has people interested but not enough wanting to pay for it.The best way to validate a product is to ask for a potential customer's money. Click To Tweet
Now that we know what we want to validate, how do we actually validate this? Where do we even begin. Follow the next 4 steps to validate your idea and get you going down the right path to a successful launch.
Step 1 – Look For Competitors
First, we want to validate that there is a market. To do this, we want to search for similar products to our ideas. A few places that you want to search includes Google, YouTube, iOS app store, and Google Play. If your product is inside of a niche like WordPress plugins or Drupal modules, then you would also look into niche repositories or marketplaces as well. You want to check to see if other people have already been able to successfully build products. If so, this proves that there is a market out there for these products. Try to reach out to the creators of existing products or creators of failed products. Check to see what may have been difficult for them. If you can’t find any similar products, it may mean that it is either a difficult problem to solve or that people aren’t willing to spend money to solve the problem. Don’t be discouraged at the findings of this step but keep in mind the results of your findings in the next few steps.
Step 2 – Talk To Potential Customers
Now that we have looked into the market, it is time to validate the problem that we want to solve. To do so, we need to go out and talk to actual people who would be potential customers. I like to find 30 to 50 people for this step depending on the type of product and market. These should not be friends and family as they will usually side more on the positive side than normal. You can get good results from friends and family and validate their feedback with the next step, but I find it is better to look elsewhere for the majority of this feedback. So, where can we find people to talk to? Depending on your following, you may be able to just post on social media or post on your website that you are looking to talk to people that has a certain type of problem. For example, you may tweet something like “Anyone have issues finding a good time tracking app? I would love to talk to you about your experience.” If you don’t have a following, you can look through blogs, Quora, Facebook, and various places for people who have commented about having a problem similar to the one you are trying to solve. For example, if I were creating a time tracking tool, I may search through a freelancing blog for people leaving comments asking for a good time tracking tool.
So, what should you talk about? You want to focus on the problem itself. Don’t try to sell your product or anything much about it. You also don’t want to persuade them to feel like they have the problem the way you describe it. So, the first step is to build some rapport with the person. From there, you want to ask several open ended questions about what there problem is, what have they tried to solve the problem, and how did they feel about those solutions. For example, for the example time tracking tool, I may ask things like
- “Why do you want to track your time?”
- “What have you used to track your time?”
- “How did you feel about the experience of using _____(product they have used)?”
I created a guide for talking to customers with more example questions which you can find at the end of this post. This process helps you validate that other people have the problem that you are attempting to solve. Ideally, you will have over half the people you speak to have the problem that you are looking for and describe their situation in a way that fits with the product you want to create. If less than a quarter of people have similar problems as what you are trying to solve, it may be time to pivot your product’s goals.
Step 3 – Ask For Money
Now that you understand and tested your theory of the problem, you should have an idea of the exact problem that you are solving. However, if you jumped straight to creating your product and launching it now, you may find that no one buys it even though it solves a problem. This is because not all problems are ones people are willing to pay to solve. For our example time tracking tool, people may need to track their time and find their existing tools are difficult to use, but they may not be willing to pay for a new product to learn and use. So, now is a great time to reach out to the ideal customers out of the group of potential customers that you spoke to and ask for a payment. You can do this in a variety of ways. You can create a simple landing page with a simple payment option. Or you could even use a newer crowdfund platform such as Kickstarter or Indiegogo. I like to just ask a few ideal customers to make a payment just to ensure that there are people willing to pay for my product once it launches.
Step 4 – Create An MVP And Test
The final step is to create a minimal version of the product. Ideally, it would only be 10% of the product. For our example time tracking tool, maybe we go and create the overall design and layout. Alternatively, it could be a single main feature. Then, we want to go back to our potential customers and show them this minimum version. Ask for feedback, suggestions, and concerns. Now, if they like the direction that you are headed, you know that you are on the right path. If you had validated the problem and created the entire product, you may have found that your idea of the solution may have been different than most of your potential customers. So, we want to test a minimum version to ensure that we are going down the right path. From here, you can start building out the product and preparing for your product’s launch.
Now that you have a good vision of what you should validate and how to do it, it is time to get out there and start validating your ideas. Below, you can claim a free guide that I created for talking to potential customers and some more example questions to ask them.