It's common for many people to err on the side of excessive optimism when they have a business idea. They trust too much that their project will be successful no matter what happens and dive headfirst into the market. And, although being positive is not a bad thing, we must also try to be realistic, since rushing into entrepreneurship is never a good thing. In the world of entrepreneurship, everything must follow a path filled with essential steps that must not be skipped, including the validation of the business idea.
Validation is one of those essential processes within the entrepreneurial world that must not be overlooked. It allows you to compile information about your product or service before its launch to the market to make sure if your project has the potential for success or if, on the contrary, it needs improvements and changes or, even, if you should leave that idea and look for another. By verifying its future prospects, it ensures certainty before investing in it.
The importance of validating
As we have said, validating your business idea can make embarking on an entrepreneurial adventure safer and less uncertain. This process, whose main objective is to minimize failure, saves time and reduces costs, avoiding unnecessary losses. We briefly explain why
- Saving time and resources. Imagine that you launch a project to the market and it does not have the demand you had imagined, so you have spent time and resources for something that, in the end, will not generate any profit. For this reason, it is essential to validate your business idea in advance, because it allows you to avoid spending your time and money on a project that would have no future, and you can direct your resources to opportunities that promise more.
- Understanding your customers better. Validation also helps you gather quality information about your target audience. By testing your product or service in the market, you can better understand the needs and desires of your audience and adjust your offering based on the collected data. In other words, it allows you to discover new needs that you may not have considered before from your customers and that you can address.
With all of the above, it's clear that validation allows something fundamental when it comes to entrepreneurship: minimizing risks to the maximum.
How to validate
When it comes to validating, it can be done in two ways. On one hand, validating the solution or the problem. That is, have you identified an unsatisfied desire, a situation or a need which requires a solution? Then measure the market’s interest in finding that solution, so before getting to work on solving it make sure it’s a real problem and not just your perception. On the other hand, regarding solution validation, it involves determining which of the solutions you have fits better into the market or if the one you have is truly in demand and effective.
But, surely, now you're wondering: How do you validate an idea? Let me briefly explain the steps to follow for that:
- Conduct thorough market research, understand your target market and its needs. Gather all the necessary information to understand the context in which your project will operate. To do this, use the SWOT analysis.
- Once you understand the market in which you are going to work and you have planned your product or service, present that idea to your close circle to get a first feedback
- Interviews and surveys. Now it's time to step outside your circle and comfort zone, and reach out to people you don't know but who are part of your target audience. Learn their opinions through interviews and surveys, receiving a second feedback that's likely different from what you already had. This input will help you make valuable changes.
- Market testing. Test your product or service in the market through an MVP, which stands for a minimum viable product—a prototype or unfinished version that allows you to gauge customer opinions on your product with minimal effort.
- After collecting the data from the market tests, it's time to ask yourself several questions, such as, for example, "Does it have financial viability? Is it profitable? Do you need to make changes based on what you've discovered through testing?" If everything has gone well and, after launching your MVP, indications are that your project will be successful, it's time to refine the initial prototype and present it to the market through a pitch to gather expert feedback.
After all this, you will have validated your business idea and be ready to launch it to the market. But beware, don't forget that validation is not the only step you must take before embarking on entrepreneurship; there are many more factors you need to consider for your startup to be successful.