How to Validate your Idea Before Starting an Enterprise
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You might have a world-beating product, which came out of the best research and development lab, but it could still fail in the market! It is not because you didn’t get the business model right, but because you did not validate your business idea. Validation of a business idea is as important as the product itself. In the rush to bring the product to market merely based on strengths and beliefs, entrepreneurs often tend to ignore validation of the product or the entire business itself.
Business validation is a must in view of the inherent risks associated with entering the market without even knowing if you have got it right from the beginning. There are various steps involved in validating a business and any first-generation entrepreneur must follow these like a cardinal rule. This is crucial as there is always a scope for rectifying the business idea and taking the right approach, in case there is any lapse during validation.
The Big Idea Validation
If you have come up with a brilliant idea to develop a product or offer a service, you must discuss it with your friends, colleagues and peers for an honest feedback. On most occasions, you may encounter a negative or biased feedback. However it should not deter you from pursuing your dream. This is in fact a good beginning – because you will be determined to overcome the challenge and explain to them better the next time, while realigning your strategies. You can also determine the key business questions and reach out to potential customers; their feedback will help you make better business decisions. This step will also help you make key assumptions for your plan. The ability of an entrepreneur to call out these key assumptions, and then get early market data to refute or validate these assumptions is critical before he/she starts to invest in the idea heavily.
A standard market-research may not always work, as relevant data for your business may not be available. Reaching out to existing entrepreneurs in the same industry/ segment of interest can help in better understanding of the market.
Once you have finalized your product / service, explore the market for competition. There is no point in offering the same service or launching a product, which is already existing in the market, without any value addition. Once the competition mapping is completed and if similar product or service exists in the market, ascertain how best you can better your product and service. You will be competing with an established market player with a set consumer base and if you must disrupt that model, then your product or service should be far superior.
It is also mandatory to determine whether your product / service complies with the law of the land. As witnessed in recent times, technology-backed businesses in India are facing legal hurdles simply because legislations to support them have not yet been drafted. Therefore, a business must work within the limited legal framework, which could be a potential hurdle for expansion if decisions are taken hastily. So, make sure that your product / service conforms to the regulatory standards set for the market.
Test your Product/Service
A miniature version of the product or beta version of a service is essential in validating your business idea. Take your product or service to your select target audience with a trial offer for a feedback. It will help you in identifying the acceptance levels, flaws if any and plan any improvements that are required.
This step cannot be skipped at any cost, because it will become the pathfinder for your organization in the long-term. Without a proper feedback on the product / service from your target customers, you could end up in firefighting after investing heavily in the business. It is as good as testing the waters before taking the plunge!
Clayton M Christensen the American scholar, educator and business consultant also speaks about the notions of ‘Deliberate’ and ‘Emergent Strategies’ when testing new ideas or products. While a deliberate strategy makes you focus the new idea or product on the anticipated opportunities, the ‘emergent’ strategy makes you stay open to the unanticipated opportunities that might come your way while trying out your deliberate strategy. It is always a delicate balance between ‘serendipity’ and ‘calculation’ – and an entrepreneur has to have the insight to choose between the two – especially in the early stage of the business.
The validation of an idea will strengthen your resolve to venture into an unfamiliar territory more confidently. You will also be in a better position to understand the market and take safeguarding measures. Business validation will help you in concluding whether you will succeed and estimate the time it takes to reach the goal. Overall, it will help you prepare better and remain well-equipped to take on the market challenges.