Test Your Business Idea
Validation in short:
Validation is the process of testing your business idea by asking and answering questions to see if it will work out. Specifically, you are trying to see whether or not people will pay money for your product or services, which will cover your costs and help you create a profit.
00:30 - Why you need an Legal Entity
01:40 - What is a Legal Entity
02:10 - You Options
02:50 - How to Choose
03:40 - Your Next Steps
Framing Business Validation
Odds are, you’ve come up with a lot of business ideas over the years - and you’re not the only one with those ideas. It’s very likely that someone has generated an idea very similar to yours. They may even already be working on it.
While Mark Twain was probably wrong when he said there are "no new ideas", he sure was onto something.
1: Should I Just Skip Validating My Idea?
As an entrepreneur, it is your duty to not only sort through all of your ideas and to pick the best one; you also need to choose one which idea the community around you demands, and is willing to support.
Here Are Some Reasons To Validate Your Idea:
It's Easier to do it now
Make it easy to get investment
So the question becomes, how do you pick which idea (and which version of that idea) is worth investing resources in? The answer to that question is validation.
Is Business Validation More Than just a catchphrase?
People in the startup world tend to throw around technical jargon like candy at the 4th of July parade.
Validation is a lot like 20 Questions (you know, the game you played when you were 12?). Business validation is the process. Often times, when you ask an initial question, you get an answer you do not like. This means you need to tweak your idea and ask again.
Often this process of validation is called the iteration of testing the idea. Think back to high school biology, and the scientific methods you used. The idea is both the individual parts of your business and the idea as a whole. Ask and answer questions of all shapes and sizes. They could be survey data, down payments, options, Facebook likes, or something else. Gather as much data as possible on the way and manner your idea is received.
This process is all about trying to see if your idea will work in the real world. Will it pay you enough money to cover all your costs and make a profit? Will you be able to get all of the licenses you need? Is your idea truly achievable?
How Do I Validate My Business Idea?
Now we are getting somewhere.
Validation is simple in principle, but difficult in practice. There are also many different ways to validate your idea, all of which will have their own pros and cons.
MIStart recommends using a two-step approach to business validation.
Step 1: Validation Canvas. This is a one-page worksheet style validation plan that was developed by a group of business owners. The premise of Validation Canvas is to discover all of your assumptions and then validate them by asking a set of structured questions.
Step 2: Minimally Viable/Salable Product. Create a very simple version of your idea and see what people do. Try to get people to pre-purchase your product to see if people will actually give you money. If you’re a restaurant, try doing a one day pop-up. If you’re a mechanic, fix things out of your garage. If you are a store with goods, try selling at the farmer’s market or renting some space in a local consignment shop.
Watch: Dan Martell's Video: How To Validate Your StartUp Idea →
Read: StartUp.Co pieces entitled: Getting Your Idea Going: How to Validate a Business Idea the Right Way →
Listen To Amy Porterfield's interview with Pat Flynn called: How To Find and Validate an Idea for Your Online Business →