You see big companies do it all the time, particularly in the tech sphere. They continue to evolve, testing new products and new markets, attempting to spread their tentacles far and wide with new and exciting ideas. In today’s fast-changing marketplace, constantly churning out and acting on business ideas is becoming critical to business success. Gone are the days when you could find a comfortable spot, and stick faithfully to it.
However the consequences of not validating your business, product or market idea could be enormous. Indeed, it could spell the end of your business altogether, by leading you to waste endless time and money attempting to grow in the wrong market or with the wrong feature set. Fortunately, validating your business ideas doesn’t have to be an unaffordable exercise, even in the face of multinational corporations spending millions of dollars ensuring that their new direction is the right one. Most small businesses simply do not have access to that kind of resource. So we need to move smarter.
The act of validating your business idea is one of asking the right questions, and finding accurate answers. Some of the most pertinent questions include:
· What problem am I solving?
· Can I clearly state the benefits of my solution?
· Who is most likely to purchase my solution?
· How valuable is my solution to the buyer?
· How should I price and sell my solution?
· Which markets should I sell into?
· How should I reach these markets?
· Should I investigate multiple horizontals?
· How competitive is this market?
· Have I done a SWOT analysis?
· How is the market expected to evolve in the foreseeable future?
In answering the questions above, you want to understand your criteria for success (or failure). Determine SMART (specific, measurable, achievable, relevant and time-bound) goals and validate them in a quantifiable way. There are numerous (low cost) ways to conduct this research and it might be the most valuable investment you can make. No matter what the final decision might be, the process of market validation grants you the knowledge you need to make good business decisions along the way.
Jordana Clarke is a principal at Traction Marketing and an advisor to companies in the Growth programme at ThincLab.
To get more tips and detail about cost effective validation for startups, be sure to check out the full length version of this article over on the Traction Marketing blog.