Don’t Go Broke: 5 Ways to Validate Your Business Ideas
Coming up with a new product or business idea can be difficult. And it is even more difficult to have the confidence to make the jump and push through with that idea. You will ask yourself questions like “will anyone buy it?” or “will anyone care?”
Well, you’ll never really know with 100% certainty how well your idea will do until you actually take that leap of faith and start up a business. However, there are ways to validate your business idea before jumping in head first. That way you can mitigate risks and build confidence in your idea before investing too much of your time and money.
In this post, we will look at five strategies you can use right now to validate your business idea.
1. Make sure it doesn’t already exist.
Do your research. There’s a chance that you think you have the next big business idea, but when you do a search on Google, you’ll find that there’s already a product or service similar to your idea. So before you get wrapped up in an idea, save yourself the time, and do a thorough search to see if there’s a similar product that already exists.
If you learn that your idea isn’t as unique as you thought, don’t give up on your inspiration just yet. Perhaps the existing product needs improvement, or perhaps you can offer a unique twist and target a different niche. If your idea doesn’t already exist, or you think the current product or service can improved upon, then move on to the next steps.
2. Ask your friends and family for feedback.
Seek the opinion of other people, especially people you trust. At this stage, you want to get brutally honest feedback. Family and friends can be a reliable source for feedback. Just be careful, they might not be as honest because they don’t want to hurt your feelings.
It’s important to ask them for honest feedback before investing too much time and money into your idea. If you have a prototype of your product or something tangible to show them, even better. Their feedback along with having a prototype will help you to decide if you want to move forward with your business idea.
3. Put your idea on a crowdfunding site.
Are you familiar with sites like Indigogo or Kickstarter? These are two of the most popular crowdfunding sites. Setting up a crowdfunding campaign is another great way to test the potential of your product idea. Plus, it doesn’t only help you validate your idea but allows you to raise money as well. However, keep in mind that crowdfunding campaigns are typically for new and innovative products. Re-selling other brands products or products you have imported won’t work for this type of sites.
Many people are looking and willing to pay for interesting products that don’t exist yet. That’s why crowdfunding sites are a brilliant platform for entrepreneurs testing the waters. Aside from collecting money upfront, you will be able to build a rapport with your potential future customers if you run a successful campaign. If you fail, then you’ve learned early on that there may not be much interest for your product idea.
The ultimate validation is when people or a business is willing to pay you for the product you intend to create. If you are the only person who believes in the idea, then it’s time to reassess.
4. Create landing pages, and advertise online.
A quick and affordable way to validate your idea is to run online ads targeting potential customers, lead them to a landing page, and see if they opt in to learn more about your product. To do that, you need to create a landing page to communicate the main features and benefits of your product, and collect email addresses from people who might be interested.
There are plenty of tools you can take advantage of these days to easily create a landing page, including LeadPages and Unbounce, or you can create a site using WordPress. These tools make it simple for users to create a page in just a few minutes. You can host your landing page on your own URL (purchase from GoDaddy or any other web hosting service). Then you’ll get full control of all of the aspects of your landing page like background image, tagline and description, confirmation page and emails, and more.
Once you have the landing page ready, the next step is to gauge how many people are interested in your concept by running pay-per-click (PPC) ads. Two of the main avenues you can use are Google AdWords or Facebook Ads.
If you choose to run Facebook ads, target fans of similar products/services (if they exist), and narrow down your audience to your target market’s demographic details until you have an audience of approximately 200,000. If you go the Adwords route, focus on keywords with over three to four words — also known as long tail keywords — as this will help you target searchers who have higher buying intent.
After a couple of days, you will have gathered valuable data that will help you forecast if you have a blockbuster in the making or a total flop. Check to see if your campaign has gotten a high click through rate (CTR) — the ratio of the users who clicked on your campaign to the total number of people who have seen it. You’ll also to see if a large number of people who went to your landing page bought your product or signed up for your email list. This will give you good reason to believe that people are interested in your business idea.
5. Create a pop-up store.
Pop-up stores or pop-up shops are temporary physical stores where businesses can sell their products or services.
Having a local pop-up shop is a great way to test the waters before committing to a longer retail lease. If you’re an ecommerce business, this model provides a relatively low-cost way to explore a new revenue stream.
Opening a pop-up store can be summarized in four simple steps:
- Search the neighborhood you want to be in to find the right space.
- Plan the logistics such as payments, store setup and operation.
- Promote your pop-up by reaching out to local bloggers, giving away flyers, etc.
- Open your store, and offer engaging experiences to bring in foot traffic.
Based on this experience, you will have a better idea if your business idea will be a hit.
It Will Not Be Easy…
The journey to validating your business idea won’t be as easy as flipping a coin. However, it is a critical step you need to take if you don’t want to waste time, money and effort down the road.
There’s no such thing as 100% success guarantee in business startups, but using these techniques can help improve your chances.