Will your business idea fly? Starting a business takes a lot of time, effort, and resources. Indeed, it is exciting, and it can also be risky to invest everything without validating it first. So, before you jump right into it, there are steps you can take to help assess your potential startup.
Test your business idea with the following tips to help you save time and resources.
Define your product or service
It is hard to start anything with a vague idea or even with a hundred different ideas at once. The first step is to define your business idea. What is your offer?
Is it something that you can create or you are really good at doing? Perhaps it is what you are very passionate about?
Write down your startup business idea. Be very clear and specific. Here are some examples:
- As an expert in digital marketing, I will offer my service to small businesses by setting up their website and social media pages.
- My business idea is coaching women with relationship goals.
- I will open a store that sells food products, specifically gourmet.
Identify the problem that your business idea is trying to solve
Business is about providing value to your customers. Furthermore, understanding your customers well is crucial to every business. What are you trying to help them out with? Will your business add value to their lives?
What problems are your potential customers facing? Define why they will need your product or service. For example:
- It is hard to get fresh fruits and vegetables in my community. I will open a store that provides these products.
- Every morning, getting a taxi to work is almost impossible. With this app, a customer can book a ride easier and use cashless payment methods.
- Some restaurants do not have their own delivery staff. My business will partner with these restaurants, and provide them with a third-party delivery service.
Study your competitors
The next step in validating your business idea is to study your competitors. Do you have any direct or indirect competitors? How are they doing now?
Having competitors is okay because it means that your idea has a potential market. List down your competitors. It will give you an idea of how much customers are willing to pay. It will help you identify strategies that help the business thrive.
Since a lot of businesses are already online, this can be easy to do. Study what they offer, and observe their existing customers. If they are not online, try to visit their store and experience it for yourself. Buy their products if you have to.
Make some observations, such as:
- What are their target customers like?
- What positive reviews do they get?
- How do they price their product or service?
- Has any similar business failed? If so, why?
- What are the key features of their product or service?
- Finally, think of what can help you stand out from the competition.
Interview your potential customers
Conducting interviews or surveys seems old-fashioned. Yet, one of the best sources in providing valuable insights is your potential customers. Find out their needs.
Talk to them and ask the right questions. It can be a casual conversation, but just be sure to take notes. Alternatively, you can create online forms that they can answer. Here are some questions you can ask.
- Why did you buy this product or service?
- What value does this give you?
- How much are you willing to spend?
- Are there other features that you are looking for?
- What do you think can be improved?
Prototype and test
Build a prototype of your product or create a test service. If you can afford to create an actual sample, go ahead. If not, you can make a visual sample first.
Consider the features that you want to include. What do you want your offer to look like? What experience do you want your service to provide?
You can also join social media groups that are focused on startups and entrepreneurship. Share your prototype. The members can give insights and feedback.
The advantage of having a prototype is having something that you can present to other people and test. You can tweak features and materials as you validate your idea.
Identify what you can improve
Have people use your product and service. You can start within your network, and gather feedback from them. This will help get you a better understanding of what you can improve.
This could be the design of your product, the way you present your services, the experience of using your app or website, or even your payment process.
Do the numbers
Before you launch any business, you need to do financial projections. Figure out the money. How much do you need to start? Consider how high or low your operating and production costs will be.
You need to know how to do your pricing and what your cash flow will look like. Here are some points to consider.
- What are the costs of my materials and labor?
- How much will marketing cost me?
- What are my overhead costs?
- Will creating this product be too expensive?
- Is it profitable?
Consult a mentor
You might have a business mentor or an expert in your network. If possible, try to consult them. Try pitching your idea to them. Mentors can provide great support in refining your business idea. They can also share experiences that they may have had in a similar industry.
Mentors also have an established network. They can also refer you, opening more opportunities for you. If you will need an investor, they can most likely connect you to one.
Will your business idea fly?
It is time to assess the results of the testing and research. After gathering all of the data you need, you will now be able to determine if you can proceed with your business idea. What is the potential for your business idea?
It can be tempting to launch one right away. Validating before you go into full production not only saves you time and resources, it is essential in measuring the potential of your business. The process does not have to be complicated. Keep it simple as much as possible, get ready to learn, and enjoy the process.
[Read Next: Do you Have What It Takes to be an Entrepreneur?]
