Having a business idea could be the beginning of a challenging, yet exciting endeavour. If you’re eager to turn your idea into a successful venture, the first thing you should do is test it. As starting your own business is one of the biggest risks you would take as an entrepreneur, it’s essential to validate your idea to increase your chances of success. Many startups fail because they don’t carefully think through this stage of the entrepreneurial process before investing their time and resources.
In this article, we outline how to test your idea and increase the odds of success. For more insights from experienced entrepreneurs, sign up to our EWOR Platform and gain access to over 17 courses and a plethora of resources.
Why Should You Test Your Business Idea?
Even if you have a great business idea, it’s based on assumptions. You assume that your startup solves a problem. You assume customers’ pain points as well as the positioning of your business in the market.
Testing those assumptions will help you identify possible imperfections in your idea that you can work on and improve before launching. While you can’t eliminate risk, you can reduce it.
Your idea is the theoretical framework of your business, but you might be surprised to find out how it operates in practice. Note that even if someone likes what you have to offer, it doesn’t necessarily mean they would buy it. The benefits of testing your business idea are:
- Gaining additional insight as to whether your idea is as good as you thought it is
- Adapting your innovation according to your tests and results and thus, refining your idea
- Revealing areas where you can minimise costs
- Discovering the financial potential of your business venture
6 Steps to Test a Business Idea
Do a Feasibility Check
A feasibility study in project management examines the viability of a project. In other words, it’s designed to analyse the likelihood of your business idea being successful. There are 4 main types of a feasibility study:
- Technical feasibility: it evaluates the technical resources available for your project and whether your idea meets the necessary technical requirements.
- Economic feasibility: assesses the costs and economic benefits of your project.
- Legal feasibility: it determines whether your project is in line with legal requirements, such as data protection or zoning laws (regulation of private property).
- Operational feasibility: it measures solution acceptability – what do the end-users, managers, and employees think about a particular problem or solution.
- Scheduling feasibility: it refers to the timeline of your project and its probability of being completed on time.
A feasibility check should provide answers to the following key questions:
- What is the problem your business idea solves? How does it solve the problem?
- Is there a market demand?
- Are there potential customers in the market? Who are they?
Perform a Competitor Analysis
By researching your competitors, you can define your competitive advantage. It’s what gives you an edge over other companies in the market. What aspects of the problem have already been addressed, and what haven’t? What is it your competitor isn’t doing well enough that you can do better? Answering those questions will give a more definite form to your idea as well as help you propose and communicate a unique value to your customers. Further, you learn what strategies have worked in the past and achieve a better understanding of your business’ strengths and weaknesses. To do a competitor analysis, you should look into:
- The features of their product or service
- Their pricing model and how much they charge
- Whether they sell directly to customers and where
- Their customer service
- Their marketing strategies and website usability
Research Industry Trends
Keeping track of current trends in your industry allows you to experiment with your business idea for a better market fit. You can optimise your idea based on how customers’ needs are changing or what new technologies are emerging.
Stay on top of trends by reading industry blogs, studying statistics, subscribing to podcasts, and following industry experts. Track industry trends with Feedly and set Google Alerts for the keywords you’re interested in. Google will alert you about news articles containing the selected keyword, and you can customise the alerts to your liking.
Create a Prototype or Test Service
A prototype is a basic working sample or a rough draft of your product idea. Testing the prototype is an important phase of product development, as you need to demonstrate a physical example of your idea to your team and partners. The purpose of prototyping is to prove your concept and review usability and design.
Alternatively, build a Minimal Viable Product (MVP). The development of a MVP is the stage that follows prototyping. A MVP is a functioning product that delivers only the crucial set of functions and core features for testing purposes. Before you develop the final product, it’s important to let real users test it and give feedback in terms of functionality.
The process of launching your website should also include a testing stage to point out errors, test backend logic, and ensure smooth user flow.
Get Feedback from Prospective Customers
This is a great way to learn more about your potential customers and how they respond to your product or service. Their feedback is all-important in figuring out if they see the value in what you intend to offer the way you do.
Gain perspective by browsing online conversations and forums like Quora, Reddit or social media groups. In addition, you can:
- Run a real-time focus group (planned discussion with a small group of target customers)
- Share surveys, e.g. via Google Forms on social media or email
- Use Facebook or Twitter social media polls to test preferences
- Conduct interviews
- Ask for feedback on your own social media accounts
Apply Design Thinking
Design thinking utilises a set of cognitive, strategic, and practical procedures as a means to develop or improve ideas. It’s a hands-on approach to creative problem-solving, helping entrepreneurs convert ideas into practical solutions.
The process targets complex problems and encourages out-of-the-box thinking, which should leverage innovation in your idea. Its user-centric approach means you can build your product or service the best that it can be, since you put yourself in your customers’ shoes.
Design thinking is a practice, which is worthwhile implementing in your business for the long haul. You can learn more about design thinking and its 5 stages in our blog.
Business ideas are exciting and inspiring. Some of them are worth the investment, whereas others might need to be modified. In either case, idea validation will assess the viability of your business, challenging you to experiment, learn and solidify the full scope of your project to become a successful entrepreneur.