A few things I advise my concept-stage clients to do:
1. Build yourself a beta site. Position it as a sales and marketing site (not a business plan site). Practice describing your product so people will understand it and want to buy it in the space of a web session. Make it awesome.
2. Promote the hell out of it. Personal invitations, social networks, SEO, PPC, and everything else you can think of. TechCrunch, Angel.co, industry and topical blogs, etc. Use landing page optimization techniques to fine-tune your positioning and keywording and conversion rates.
3. Collect customers who are interested in your product. Email addresses and Facebook likes are fine; full registrations are better. Ideally, get people to pay you actual money now (or promise to pay you actual money) to use your product when it's available. Pro-tip: use a crowdfunding site to pre-sell your customers on a "if-we-hit-our-goal-we-all-get-to-be-customers" basis.
4. Iterate until your pitch starts to generate supporters on its own. THEN build your product.
Things not to do:
1. Think that validation from friends or entrepreneurs or investors is the same as validation from customers.
2. Wait for your product to be built before you validate it.
3. Assume that your idea is right in its first iteration.
4. Fall in love with your idea at all costs (I call this the American Idol Syndrome).
In the modern startup environment, traction is the ball game. If you can't generate interest with one approach, change your approach until you do. And if you can't figure out how to get people excited about your business at all, your idea probably isn't ready.
Jen, Not sure where I came across this brief but pertinent info which should help answer your question:
The Step Zero Viability Checklist:
1. What problem are you solving and how big is this problem?
2. What’s your solution? What makes your solution the best?
3. How will you make money, and how much will you make?
4. How will you market your product or service?
5. Who are your competitors? What makes you better?
6. Do you have the proper team to pull this off?
7. Do you have the right mentors for the right areas of your business?
8. How much money do you need before you can start turning a profit?
I typically validate my idea through sales. I know this is a strange thing to say, but it is truly the strongest validation.
I try to identify a lead customer and to get them to pay for my product/service. If they do, I can then close the loop with them and others to see how it worked out. This is great for service businesses with a twist.
As most of my businesses are product businesses (high tech), the cost to build the product is high and it is difficult to sell before it is built. Therefore, for those, I do some market research (are people currently buying the product) in the product and the development path (can I develop a path to the product that people can follow). Once the path is laid out, the only question is are real customers interested in the products along the path; for this, I seek advice from a domain expert (usually my first advisor.
Most other methods of validation are dependent on hand waving and give rise to a lot of interest that cannot be converted into sales. Also, be careful of people who are enthusiastic but don't contribute because they often stick around "in case" you succeed.
Validating your idea really depends on the product or service to be offered. If the idea is something that you can provide a demo with little capital, then having candidate customers and even friends do a dry run of the product or service can provide valuable feedback. If the idea is more capital-intensive (high tech, biotech, etc.), then a demo is impractical and validating the idea requires market research such as candidate customer interviews, an analysis of the competition, and a knowledge of the industry trends.
Some of the best feedback you can receive is when a potential customer expresses dissatisfaction with some aspect of a current product or service, especially when provided by a larger vendor. Dig deeper into those pain points and see if your idea can solve them.
Finally, just keep pitching the idea, you never know what markets may open up that you originally never thought to address.
Use a business model canvas http://bmfiddle.com - the canvas will be your your scorecard as you develop your idea. (Disclosure - I built this free tool with over 2500 members to date)
Start with blocks 1 and 2 - value proposition and customer segments. Make sure to check the Help as you work on blocks for some pointers. nothing is right/wrong - get all your ideas/thoughts down and then you can start to focus/order them.
The items on the canvas are all really guesses. So once you have them on the canvas you need to validate them - turn guesses in facts by proving them true or false. You do this with tests.
Business Model Fiddle also has templates for other useful tools/exercises such as SWOT, Personas etc.
Depending on the nature of your idea it may be viable to create a Minimal Viable Product (MVP) with which to test (a prototype version with limited features).
Tests can include a simple web page with information and "sign up" form to gauge interest. Validating by talking to potential customers etc.
Update the canvas as you get results and add new "guesses". You can take Snapshots of the canvas to record your progress and capture key changes.
This approach will minimize waste/costs and get you to a working solution quicker. It also sets you up really well to write a formal/traditional business plan as the canvas blocks support/map to sections of the plan.
I highly recommend Steve Blank's book "The Startup Owners Manual"
Find past case studies of similar ideas that have been put in place and achieved successful results. Using statistics/research and trends that support and substantiate your idea also helps. I think its often a numbers game. Evidence seems to be very important in persuading others to believe that you ideas will work, even if in small measures.
Use a survey - some people you know and some you don't - give 5-10 questions about your idea without giving it totally away. Use T/F or multiple choice answers. It should give you enough info to see if the plan is valid or not.
List them down and discuss with fellow peers whom you might join to start the company or if you begin the company alone then check research out there that might be similar to a company you are launching. Because it with give one a rough idea what to expect in a challenging market.
Several ways: Market need (Sales or ready prospects), Competitive analysis (position and validation), and whether you would use your own product.
Finding the people that your product or service would be serving and ask! You can also run some adwords testing using a site like unbounce to measure the effectiveness of the campaigns you set up. If it is a service check out Ramit Sethi, he has a lot of good content on this, for a product consider Tim Ferris...
If you are using validation as a synonymous term for proof of concept about the only thing that matters to investors are sales that meet the projected LTV i.e. someone liked your idea enough to buy it and once they bought it their needs were satisfied as evidenced by the fact the service contract stayed in place, was renewed, your product was not returned, etc.
As early as possible in your development stage identify core target markets as defined as "if they don't buy, no one will" and get as much feedback/input from them as possible. Even if it means offering them the product for free once developed. Keep in mind however, while many will say sales as the ultimate proof of concept; sales alone mean nothing. For example - if you offer a service which requires a 13 month period to recover CAC and your engagements never make it to 13 months you are in trouble even though sales were good.
This is why valuation is so difficult and typically poor for pre-revenue companies – no one really knows how the product/service will be received in the long run among the real world.
That would involve a very lengthy answer.
Your next step should be to contact SCORE at www.score.org
I am a SCORE certified mentor. SCORE is FREE service providing expert business counseling and is a great way for you to understand what it will take to do (or not to do) whatever it is that you are trying to accomplish. SCORE has 13,000 mentors in 348 US chapters. Good luck to you.
I validate my ideas to people I trust. Some people may be in the business, but I also check out the ideas to non-business people. I am also part of a small group of 'friends' where we can check all ideas that others have
Create a Funds Needed (before you start) list. Estimate your sales, then decide when you will get paid for the sales = cash receipts. Enter the Cash Receipts and all expenses on a Cash Flow. Study the bottom line.
Great answers. Validation should clearly be part of the launching period to help determine as fast as possible what customers want and don't before investing money and time. Should check out the book The Lean Startup by Eric Ries.
Noah Kagen founder of AppSumo has written a lot about testing fast also on his blog Okdork.com Suggestions like testing on Craigslist to see if there is even an interest for the product or service by putting up some good ads. Dane Maxwell is another great speaker on the topic from thefoundation.io/blog He also suggests different ways of validating ideas and having the demand pay for the product/service. Good Luck!
Jen, started a similar discussion 2 months ago and got interesting answers. Hope this helps.
The very first thing in my opinion is to determine the difference between an idea and an opportunity. A good idea does not mean it is a good business opportunity and vice a versa. So, ask the great start up questions, go to the SBDC and SCORE as suggested already, and then assess the risk. What do you all think?
For online services I tend to recommend a launch page to start and start content marketing and talking to people or businesses. Use Twitter, Facebook and LinkedIn to see if they care and drive them to your launch page. If you feel its good enough, then create a very small prototype and create a community of beta users. Use tools like betali.st and startuprocketlauncher.com to gain a following fast and engage the users. Again, if its not working out so well, ensure your messaging and users are aligned. Part of starting a business is knowing where your users are and pitching them and converting them. If you can't do it now, then work on those skills first then focus on your product... maybe try another idea you have first and try to sell it and experiment and practice. This is all part of validating your idea. Think of what sort of metrics you should see as success. Count the small ones not just the large easy sales which actually don't help you learn about your industry or space. Its the small failures that you learn from. If you are not reaching your intended audience, it forces you to make changes to your pitch or product etc. Good Luck!