Here are the basic steps to take, after choosing an idea you want to bring into the business space.
What are the big issues here?
- At the end of the day, it is about values in the eyes of your prospective consumers.
- It is also about profitability and survival of the business and acceptance by the place or location your business is situated.
You don’t select ideas for the sake of it. You might get your hands burnt.
You must find out the nuances or the subtle needs of your prospects and how to serve them profitably.
You want to discover the big help as needed by your potential customers. This is expected to be matched with the appropriate strengths and core skills found in your enterprise.
That would stimulate your passion, which will also be needed to sustain the business through its rocky life cycle.
(This is assuming you have discovered a willing market niche, waiting to be served, and also willing to pay.)
When this has been achieved, this brings about mutual benefits between the business and the consumer.
Back to our topic…
Testing & Validating A Business Idea
Before you set out in your test marketing efforts, just like in any department of your business, you must consider quite a few things.
- Do have a check list of what you want to achieve. Write them out.
It is possible your hunch might be agreeable with the needs of the market. But be cautious before you deploy all resources blindly in execution.
- Do not fall in love with your hunches until you validate.
- Know the psychological makeup of your prospects.
Remember that money making ideas are not really about you, the producer.
The decision and power belong to the consumer. Of course there are occasions where you as the producer may psychologically influence customer buying decisions. We see that happen.
It is also common with high profile goods and services targeted at the super rich. If you can feed their ego which tends to work.
But be aware that there are no stupid consumer! You must still deliver value as perceived by them and not by you to a large extent.
But for the mass market, they are damn stubborn psychologically. They would scrutinize your product for every cent, kobo and farthing.
Validating For Profitability
- After the selection, the next step is to develop the ideas into concrete products and other offerings.
For commercial ventures, validation is an exercise you must carry out to confirm that the idea will sell profitably and to meet your other objectives.
- Determine the amount of resources and capital – both human and material – that you will need to do your testing.
- Test for the depth of the market niche. How large is the potential target consumers?
The population of the expected consumers must be large enough to guarantee adequate supply and patronage into the future.
This segment of the population must also be big enough to accommodate other would-be future competitors. Otherwise you may have to drop the idea or modify it.
- You must also re-confirm that the prospective customers have the financial capability and willingness to pay. These last two factors are sacrosanct.
Notes About Validating A Business Idea?
- Start with the “minimum viable product”, the MVP.
(A sensible concept conceived elsewhere – but not by me, though). It means you start with a product or service offering that ought to give minimum customer satisfaction.
Note that, it is not every idea that is feasible to come up with such a prototype.
The alternative in that case, would be studied through the feedback from surveys, questionnaires or a dialogue with the prospects. The description of the product or service in question will be explained to them.
Now back to MVP. You can always tinker with this over time. With improved and additional benefits – as feedbacks are received from existing customers after the product launch.
- Before you deploy any significant resource, let a sample of your target consumer use or try out the idea.
- You may have to practically leave your comfort zone to move into the trenches – outside, away from your computer – to carry out this exercise successfully.
However if you are the shy type or for some reasons you can’t go out, pay people and let them do it for you. But you must monitor the exercise is not flawed in your absence during field test.
- Don’t test your ideas amongst friends and family members. They will most likely be biased and won’t be objective in their response. Ok?
And again, they might not be representative of your target market.
- Getting across to a carefully chosen group or individuals who fall into the definition of your target consumers, is a better route to take.
- Additionally where practicable, include relevant retailers that serve your potential consumers but not in competition with your product. Get their feedback.
- As an aside, listen very well to all feedbacks and understand what they are saying. This sounds simple but it is difficult for many people.
Personally, I am just overcoming this shortcoming myself; to really listen to understand and keep my mouth shut!
Advantages would include; your discovering the real meanings behind what the prospects are saying. And not what you think they are saying.
- Tabulate the responses you get from the field – whether online or offline.
- The list of questions would include open-ended, direct and indirect types. If it’s possible, anonymous feedback is more reliable.
- Do not take the feedbacks personal, even if you are not happy with some of them. Better be sad now, than fail later into bankruptcy.
Feedbacks tend to bring up the need to slightly modify your initial idea. Respect this; and work on it.
Nothing to be ashamed about but it is a cause for thanksgiving. Now you know their needs much better than what you originally envisaged.
- Don’t be surprised if the majority of the feedback indicates a need for a toned down product, hence a reduced cost of production for you.On the other hand, the field results could scream for additional features.
This could entail additional cost of production you didn’t bargain for – to really make an impact. If you don’t have the extra funds, then you will wait or find a creative solution within and outside the box.
Decide on what to do but be careful. It is not every time you throw available money at solving problems. The solution might just be; your being creative again – without spending additional resources or spending much less.
Abundant supply of resources may not necessarily guarantee the success of a business idea.
I remember a side small business I targeted at kids. The product came with a simple packaging.
We sampled schools, but they preferred a more robust package. However the schools did not want to pay for the slight increase in price? So we decided to face a different market segment – mostly individual parents – who were pleased with the basic packaging.
Validating With No Product
This is another creative move to determine beforehand, if an idea would be acceptable by the market or not. The idea is non-existent yet as a product. You have not even produced or manufactured it.
But you have created a modest test-advertising drive for it. All attributes are tested from the product formulation, pricing, distribution channels and more.
- For instance, today, some car manufacturers use the 3D technology to come up with new versions of their models. They look like real cars on TV adverts and in other media.This is to get feedback from their target consumers, before going into spending the real money on production.
This they would do or not. Or change their earlier marketing plans.
- This approach is used by some authors and professionals. They publicize what they are yet to write about. The feedback gives them the true picture if they should go ahead to start writing on a particular topic or not.
It is much easier to try this little trick. If it is feasible for your product idea, it should work well on the internet platform.
Just do some little advertisement of the attributes and watch reactions.
In the brick and mortar business – that is the physical location – a similar approach can also be used but this is quite restrictive for some ideas.
Outcome of Validation
- However do note that, despite the positive validation at full launch, the outcome might go either way in the course of time.This is not the time to be squeamish if things don’t go as envisaged!
You must identify the reasons.This will include your validation process and your feedback notes. And other unexpected factors might be responsible which might be beyond your control.
Conclude on how the outcome can be modified and resolved.
- Decide if it will fly eventually, despite the rocky beginnings. Or to abandon the idea temporarily or permanently based on all facts at hand.
And painfully, there might be very cogent reasons why you must abandon the idea and cut your losses.
You may reconsider to re-launch this idea in the future or at a different location.
This goes with the assumption that, you or your team was not the main culprit – indirectly responsible – if the outcome of your exercise is below expectation.
Smart Products Are Developed For Life
Now let us assume that after a successful launch, where all signs are encouraging; how do we proceed further?
There must be a culture of continuous strategic improvement of great customer experience of your offerings over time. I must admit this is tough in reality. But we have no choice but to strive. Otherwise our businesses would lose out eventually.
- I like how “Application” (software) developers market their products.
They release the first but basic version – beta version they call it – at a modest price. In some cases they are given out as free.As the product goes through its life cycle – with all the opinions they receive – these developers add more juice or drop some features. They eventually sell at a premium price eventually. Microsoft is it?
- Don’t fall for too much perfection. Perfection may delay your coming out. Start with the minimum idea that is acceptable in the eyes of your prospects. Then improve with time.We have seen how Facebook overtook MySpace. Google has openly done better than Yahoo! as a search engine.
We have seen how these champions evolved over time, in addition to servicing other secondary needs of its primary consumers.
At the initial stage of their entry, they handled rudimentary services.
Put it at the back of your mind, that a business is regarded as a
“going-concern”. That is one of the secrets of success in business. Your starting ideas are your babies or seedlings that ought to grow through different stages into maturity.
- Be mindful when all well thought-out plans fail. At times challenges may go beyond what the entrepreneur can cope with or comprehend. It happens. It can be terrifying and confusing for a hard working entrepreneur.
When your business is down, you become confused, more lonely and despaired. A few times you simply can’t even explain the reason for failure or that success.
Few years back, on a personal note, I ran two businesses which did well over the years. Suddenly they continued to fail. I did everything to improve the situation of things, no positive result.
In retrospection, I know I tried all I could to raise the nose of my entrepreneurial plane, it still crashed. Nevertheless, I learned quite a few things from the excruciating experience. A few outside the purview of business skill.
Today, thankfully, one is in a better position to deploy weapons as needed, for relative success.
One could now recognize – much better – the signs of an impending red flag, before it appears in the horizon. Still, there would be near misses but you get better, based on prior experience.
The lesson on testing and validation of your ideas before implementation: You can’t know the future with all certainty.
And you can’t be absolutely sure of the eventual outcome of your product or idea; into the short term or long term future.
Sadly, Coca-Cola’s “New Coke” failed despite huge money spent on research and validation as claimed. But this is not a consolation for us not to do our own proper testing and critical observation.
- I am aware, many products or ideas do well without due testing by the producer of the idea. One cannot rule out the hand of providence and a good intuition. Or accurate observation and studying of the needs prospects truly hunger for.
- But a test helps anyway if the resources are there.
This could come as simple as: asking potential consumers face-to-face questions and writing down their responses for analysis.
But ensure you have a reasonable large number – not 10 or 20 prospects – to come to your conclusion of implementing or killing the idea.And talking about success; when all the ideas seem to be coasting home as expected…be thankful. Yet find why it is so.
- On his unprecedented success, Paulo Coelho – the superstar author was asked about the secret to his selling mega-millions of his works? He replied that he couldn’t put a finger on a reason. But he submitted that he wrote each work, with love and passion.
So you have to work hard at least on your idea before execution. This should be done with all your resources.
Should you need further assistance – as two heads are better than one; reach out for a more accurate marketing strategy for a highly rewarding implementation.
Let me hear your thoughts below if I missed out anything…
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