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Your business idea is worthless until you validate it

by Ana Lopez
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Jake Hare is the founder and CEO of Launchpeer.

Ask the average person to describe the essential steps in starting a startup, and they’ll probably give you some version of the following:

Step 1: Come up with a business idea.

Step 2: Pitch your idea to investors.

Step 3: Create your product.

Step 4: Sell your product for a profit.

Ask the same question of a successful entrepreneur and he’ll add a crucial step: validate your idea. This comes before sales, before product development and before fundraising. You could even argue that validation comes before the idea. After all, before coming up with a solution, you need to verify that you are solving a real problem.

Validation is the difference between success and failure for a large number of potential entrepreneurs. If you want to create a thriving business, validating your idea should be the #1 priority.

Validate your market.

You can build the most brilliant software in the world, but you still won’t have a successful business unless people are willing to pay for it. That’s why smart founders don’t start with a product. They start with what entrepreneurs call the “pain point”: something annoying, unsatisfactory or difficult that people encounter in everyday life. Great business ideas start with terrible pain points.

Chances are you already have an idea of ​​the pain point your startup is targeting. But you must confirm that it is an urgent problem for many people. Otherwise, you could spend a lot of time and money building a product only to find that there is no market for it.

Validating the pain point starts with many conversations. If you have a business-to-consumer idea, talk to everyone: friends, family, people at parties, and strangers on online forums. For business-to-business ideas, reach out to public figures in the industry and start conversations at networking events. Bring up the pain point and listen to what people say.

Ask open questions. Try to get people to describe how they’re currently solving their problem, why they’re doing it that way, and what’s frustrating about it. This will often lead to important insights on how to build your solution.

If you can’t find many people interested in complaining about your pain point, it could mean there isn’t a market for your idea. Go back to the drawing board and choose another problem to tackle.

Validate your pitch.

It is important to validate both your solution and your problem. If your idea won’t appeal to your target customers, it’s best to sort that out while you still have the resources to run. So start testing your sales pitch even before you have anything to sell.

This could be as simple as getting people on an email list for updates on your product. That is a weaker signal than a purchase, but it does move the customer a little further down the sales funnel. Financial pledges such as resale or crowdfunding pledges are even better. The key is to give people a way to respond to your sales pitch.

There are many ways to get your idea in front of potential customers. Common approaches include online advertising, cold emails, pop-up events, social media campaigns, and viral marketing. Try a few different tactics to find out what brings people to your landing page and motivates them to take action.

This process can teach you essential sales skills and help you define your core demographics of the market. And the people who join your email list now can give you feedback and serve as beta testers during development. They will also be your best sales opportunity when you get started.

Validate your product.

The real test for your business idea comes when you take it to market. Your first goal is to collect as much information as possible while spending as little time and resources as possible.

That’s why so many startup experts recommend starting with a bare minimum viable product or MVP. Reduce the solution you offer to the essentials and see if your target customers will pay for it. If the answer is yes, you can build from there. If it’s no, then at least you figured that out before building a ton of extra features.

You can often achieve this by manually handling tasks or providing services to your customers, rather than building out a complex product. My favorite real world example is Airbnb: the founders started rent out mattresses in their apartment. As long as customers can request and receive a service, it counts as an MVP.

This early product validation serves a number of purposes:

• First, it continues to collect data and feedback from your customers.

• Second, it shows how much each user costs to recruit. That’s essential for pricing your services, coming up with a valuation, and creating a roadmap to profitability.

• Third, it provides potential investors with concrete data showing that your business model works. It’s much easier to raise money for a functioning business, even a small one, than for an untested idea.

Validate every step you take.

Don’t think of validation as something you do in the early stages of your startup. Instead, treat it as one of your most important business functions. Strive for validation before, during and after trying something new in your business approach. The fastest way to turn a successful startup into a failure is to lose touch with what your customers want.

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