Last month, the readers of my blog challenged me to validate a new business idea without using my existing audience, connections, or current business. They chose the idea for me, and I even limited myself to spending less than $500 to make it happen. Then, I documented the validation experiment in real-time throughout the month.
After a lot of little wins, several failures, and many in-betweens, the challenge ended as a success. In just three weeks, I pre-sold 12 copies of a book that didn’t exist yet, made $108 in book sales, and grew an email list of 565 subscribers without having a website.
Straight from this experiment and from how I’ve grown my past companies, here are the six stages of effectively validating a business idea.
1. Find the right niche. Starting a new business? Or simply looking for ways to diversify within your current company? Either way, you need to build a solution for a very targeted niche group of people who show a demand for what you’re creating. But that’s not all. In a recent report by CB Insights, researchers uncovered that 22 percent of failed startup founders cite their primary reason for failure as either never having an interest in what they were building or losing focus on the goal they set out to achieve. Put simply, they didn’t pursue a niche they were genuinely interested in.
If you’re not sure what your interests are, or which could lead to the right niche idea, start by looking at your hobbies, the most meaningful parts of your day, topics you could enjoy writing a 1,000-word article about, and any childhood dreams you still find exciting.
2. Focus on your strengths. If you want to build a meaningful business, you need to be great at what you do—and you must give yourself as much time as possible to utilize those abilities. It’s proven that using your strengths makes you more confident in your work, helps you unlock more creative solutions to the problems you encounter, and increases your levels of positivity, which helps create a buffer against the negative effects of stress, fatigue, and trauma.
When you choose to leverage your strengths within your business, you’re maximizing your opportunity for success by setting yourself up to be more confident, creative, positive, and less prone to becoming overly stressed.
3. Connect with your target audience. The goal of connecting with your target audience, sparking meaningful conversations, and building a feedback group is to make sure that you’re building something people will actually want and eventually pay for.
Start building your feedback group by texting, emailing, and messaging friends, former coworkers and classmates, acquaintances, teachers, and fellow members in clubs that you think would be interested in what you want to build. Join Facebook groups, LinkedIn groups, and Slack channels. Go to where your target audience exists already, and engage in authentic discussions. This is how you will learn about the biggest challenges and frustrations with current solutions in your space.
4. Define your competitive advantage. Since you’ve already spoken with your target audience, it’s time to pull the insights out of the feedback you’ve gathered. You should now be able to define a competitive advantage that’ll make your upcoming solution uniquely valuable to your audience.
What is a competitive advantage? Your unique advantage that allows you as a business to generate greater sales or margins and/or acquire and retain more customers than competitors. In short, it’s what makes your business your business. To find the most valuable competitive advantage for your idea, start by reading through all of the emails, conversation notes, and ideas you’ve recorded from your target audience conversations. Look for commonalities, trends, surprising insights, and particularly interesting ideas that catch your eye.
5. Build a proof of concept. Now you know your audience and have been learning more about their challenges. You know what you’re going to build and how it’s going to be special in the marketplace. It’s time to build a simple proof of concept that can serve as the basis for visually communicating exactly what your solution will be to your target audience.
When setting out to build a proof of concept, focus only on using the skills, experience, and connections you have. Don’t waste time and money—by learning new abilities or hiring expensive contractors—before even knowing whether or not this idea has any legs. Build your proof of concept in a Google Doc, blog post, as an explainer video, portfolio of your existing work, hand-built prototype, sales page, email newsletter, or even a Facebook group.
6. Get pre-orders from your feedback group. You’re at the stage where you’ll need to choose a realistic price point for your offering—one that helps validate your idea. Don’t worry about earning thousands of dollars from this pre-sale today, since your goal at this stage is to simply validate your idea.
Your first pre-sales will need to come from manual, individual conversations with your community. Start calling, texting, and emailing the most engaged members of your feedback community. Ask for their opinion and gather their feedback on your proof of concept. Answer their questions, tell them whether or not your solution will genuinely help their unique situation, and ask them to buy.
If you can successfully get the right people to pre-pay for your idea before you go out and build a polished solution, that’s when you know you’re really onto something.
Photo: Lauren Kallen