How To Validate Your Startup Idea With Less Time and Money
Validation: The Most Overlooked Aspect Of A Startup
There are more startups in the U.S. than ever before, and as entrepreneurs look to build their dreams, we are going to see an increase of failed business ideas. I have talked to countless startups who have great ideas, lots of passion, and a team who are fully committed to putting their money and time towards reaching their goals.
However, I have also noticed a trend where startups jump right into marketing and production of a business idea before they validate their idea. I try to catch this before it gets too far out of hand, but in many cases, the startup invests thousands of dollars and commit to a path without first understanding if their product or service is needed in the market.
I believe that startups need to be focused and committed to their passion.
However, I also know that startups need to be smart with how they invest their time and money because you are working with limited time and resources. The only way to ensure you are using your limited resources efficiently is to validate your business ideas.
What is Business Idea Validation?
Business idea validation is the procedure for testing your concept before launching the actual product. Validating your business idea takes into consideration everything from your current market, the needs of your customers, and the position that your competition has in the market you wish to serve.
To find the answers, you need to validate your business ideas
requires a broad range of activities from Googling your competitors and performing keyword research to asking your potential target audience for honest feedback.
The ultimate goal of the intense efforts needed to validate your startup idea is to ensure you are using your time and resource appropriately and positioning yourself to your strengths in the market.
I have seen many entrepreneurs who skipped this step get carried away by their self-confidence, thinking that their idea is just what the world has been waiting for. Each time I have seen these startups waste lots of energy, effort, and money.
Ultimately, more times than not, the startups who skip validating their ideas because “they know they customers want their product” end up closing their business and losing their dream.
All this because they skipped the step of startup idea validation and customer discovery.
Know Your Buyers: What Is Customer Discovery?
Your customers have problems, and they are looking for solutions to their problems. This is what customers do.
You are a startup, and you believe that you can provide a superior product or service to your customers. This is why you are starting your own business.
Customer discovery is a process where you research your ideal client, understand why they are not using alternatives on the market (or why they stopped using alternatives to your solutions), and leverage your strengths to attract more customers.
This is an iterative process where you talk with your clients to understand what they are looking for and what their problems are. Your business does not exist if you don’t have customers, so you need to find an audience who has problems you can fix and want your products and services.
Your startup can be at severe risk of failure early on if you are not able to identify your ideal customer. If you are only looking to serve “baseball players” then you are too broad. Instead, your startup needs to determine specific details about your customers, including:
The goal of customer discovery is to get a definitive and detailed understanding of the needs and goals of your clients. Many startups want to sit at their desks to accomplish this, but the truth is you need to get out and talk to your customers. There is no automating the personal, intimate information you need to discover at this stage of your startup development.
Talk To 100 People to See If There Is Market Opportunity
Your startup does not exist if there is no problem that you can serve. Many startups end up failing because they did not accurately assess the need for their service in the marketplace. Whether the need was already addressed, or the barrier of entry too high, some startups only try to niche a market that does not need another solution.
This is the most common reason that startups fail. Not the lack of marketing dollars, not the shortage of Facebook Likes and email opens. Many startups fail because they do not first identify the need for their products or services.
If you want to improve the chances that your startup will succeed, then you need to interview at least 100 people and ask them about their problems as it relates to your startup idea.
At the end of each interview, you should ask your audience to name two people who they know who would be open to talking with you. This will not only give you additional contacts, but it also will tell you if there is a larger market out there for your products and services.
Not all of your potential users are equally important. Focus on the ones that will potentially generate the most revenue, easiest to acquire, least service required or will refer your solution to friends (helping you to hyper-grow through virality). Should you want to offer a freemium model, keep special attention to neglect others, and users that you think will pay!
Build A Minimum Viable Product
Based on the results of your interviews your startup should begin investing in a Minimal Viable Product (MVP). This is an early iteration of your product, but you produce this early version in a way that does not spend a lot of unnecessary time or money.
During the time my wife and I were preparing for our wedding we had to choose a cake flavor for the reception. Instead of the bakery creating a bunch of full-size cakes for us to taste, they provided us with cupcakes that had the same cake and icing as the variations we were thinking of.
This is the best way I can describe what an MVP is. An MVP is a representation of what your final product will be but produced efficiently because you should expect the earliest versions to not make it to final production. An MVP is not a cheap, watered-down version of your product, but an accurate representation of what your customers can expect.
As you build your MVP, you need to test this idea with the people you interview. Send your MVP to people you talked in the past because your test crowd is one of your most engaged customers you might ever have.
Each time you receive feedback from your test audience, you should look for general trends that you can address and improve your MVP. This is an iterative loop cycle, with the end goal to deliver a polished product without needing to invest a significant amount of time or money. This test loop allows you to improve based on real validation for your customers.
Test Your MVP With Google AdWords and A Landing Page
As you test your MVP during your interviews, you can also level AdWords and a landing page to verify the need for your product or service among a larger audience. The great thing about PPC is that you can generate a significant amount of targeted traffic with a small budget of about $100.
You should focus on Exact Match and Phrase Match keywords to ensure you only attract qualified leads
. Also, be sure to maximize various settings like geographic setting and other details to make sure you don’t spend a lot of wasted budgets.
Since you are using very focused settings, you can be sure that your customers are highly qualified. Now you want to see if they will convert by signing up for more information or your email list.
This means that you need a landing page to collect lead generation information. You need an effective landing page that will increase conversions and make your startup successful in the long run.
You can use a simple platform like Unbounce to make quick and easy landing pages to collect leads. You don’t need an expensive website
or any other items for the lead generation page. Working with Unbounce will give you a quick and easy way to edit and publish your landing page without being a developer.
You want your AdWords message and your landing page to align. Along with having a clear and consistent message, here are some other tips for your landing page:
Describe core value a single reason someone would be willing to buy your solution.Speak to the needs of your customers and provide real value by showing how you can save them time or money.Increase signups by building excitement and anticipation for your product even if you don’t have anything built yet.
Now you can take these great strategies and apply them to your startup. Not only will you gain great insight into what your customers are looking for, but you will also be able to build a validated business idea and reduce the risk of failure!
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