Validate Your Idea (Week ONE)
Starting off our very first piece of advice for startup founders, the first of 52 that I’ll be sharing each week this year!
I truly hope that these insights will inspire and support all you incredible folks out there who are tirelessly working to make a positive impact on our lives through your businesses.
You’ve got this, and we’re here cheering you on every step of the way!
*Why 52 Advice For Startup Founders? https://paddytan.medium.com/52-advice-for-startup-founders-d3032fba9e16
- Validate Your Idea
Before investing significant resources into your startup, it’s essential to validate your business idea.
Validating your startup idea is crucial for several reasons -
A. Risk Mitigation
It helps to mitigate risk by not investing in deals with little market demand, reducing the likelihood of failure. Have you seen products that were listed in Crowdfunding sites with zero supporters?
This is a good tactic to test out if the product or service is acceptable by the markets and if anyone is willing to pay for it.
B. Customer Insight
Engaging with potential customers allows entrepreneurs to understand their needs and tailor offerings accordingly.
Who are the customers? Friends and family members are supportive of you mainly because of the existing relationships that you have with them but to sustain a business, you need to sell to the paying customers who you have no relationships with now but to build on it later.
C. Resource Efficiency
Validation ensures that time and financial resources are allocated to ideas with the highest potential for success.
What if the products that you want to develop are going to exceed the original budget that you had first setup for? This is one of the most common reasons why many hardware startups failed due to cost ballooning beyond what they have and can raise.
D. Investor Confidence
A validated idea demonstrates thorough market research, increasing the likelihood of securing funding!
Investors will not trust based on the founder’s instinct alone. There should be traction, sales numbers and potential deals to convince them that your startup is worth investing in.
Begin by clearly defining your goals and assumptions -
A. Defining Goals
i. Set SMART Goals
Ensure goals are Specific, Measurable, Achievable, Relevant, and Time-bound. Write them on a piece of paper and keep making changes to it until the goals are realistic.
ii. Utilize OKRs
Establish Objectives and Key Results to align team efforts and measure progress. If you are the only person, then be very practical on what one person can do, you are not Superman.
iii. Start Small
Focus on small, manageable goals to build momentum and confidence. Rome wasn't built in a day, so be patient as you take the steps forward.
B. Defining Assumptions
i. Identify High-Risk Areas
Determine critical assumptions about customer behavior, market demand, and competitive landscape. Ask industrial experts to get their opinions and feedback. Buy that cup of coffee, pull some favours to ensure that information that you are collecting is most relevant.
ii. Document Assumptions
Clearly outline what must be true for your business to succeed, categorizing them by risk level. Date all this information as even if you are not going to go ahead with the idea, this information will be useful in the future too.
iii. Validate Regularly
Continuously test and refine assumptions through customer feedback and market research to mitigate risks. There maybe changes in the geopolitical scenes, currency exchange, fluctuations, trend of the year, outbreak of wars etc.
Analyze your competitors to identify any gaps in the market that your offering could fill. Mistakes that many new founders tend to make is to misidentify who is the direct and indirect competitors -
A. Narrow Market View
Founders frequently focus too narrowly on specific products instead of considering broader customer needs. This leads to overlooking alternative solutions that fulfill the same customer goals, such as substitutes or indirect competitors.
For example, a office lady should not be identify her needs as just formal clothing but she can also be a mom who manages the food her children be consuming.
B. Overlooking Substitutes
Many startups fail to recognize that competitors include any alternatives customers might use, not just similar products.
For example, an Organic Poke Bowl Shop’s competition includes all food options available to customers, not just other poke bowl shops.
C. Assuming Uniqueness
Founders may believe their product is so unique that it has no competitors, ignoring existing solutions that address similar problems.
Whenever a founder claims that his product is the only one in the world, red flags will be raised immediately. There can always be substitutes or make-do within existing products with similar functions or features. Never assume that you are the only one in the world.
D. Ignoring Future Entrants
A focus solely on current competitors can blind founders to potential new entrants that could disrupt the market.
It is common for many established companies to spin off similar products from another labs.
E. Misjudging Competitor Actions
Founders often assume competitor behavior is predictable, which can lead to complacency and missed opportunities for innovation.
Never assume that competitors have to have big movements like big launches or splash advertisements over the social media to signal that they are launching a similar product.
Create a minimum viable product (MVP) or prototype to test with real users, and gather their feedback for improvements.
Types of MVP -
A. Customer Interviews
Conduct unscripted interviews to understand user needs and validate assumptions about the product.
B. Landing Pages
Create a simple landing page to gauge interest and collect sign-ups or pre-orders, providing insight into market demand.
C. Wizard of Oz
Simulate a fully functional product using manual processes behind the scenes to test user reactions without full development.
D. A/B Testing
Test two versions of a product feature to determine which resonates better with users.
E. Concierge MVP
Offer personalized services to a small group of users to validate willingness to pay for the solution.
In conclusion, the iterative process effectively reduces risks and ensures your idea is solid before market entry. By engaging in cycles of development, testing, and refinement, you can identify flaws early and make necessary adjustments, enhancing your concept's viability.
This approach also facilitates valuable feedback from stakeholders, shaping your product through prototyping and market testing. These real-world insights validate your idea and ensure alignment with customer needs, allowing for quick adaptations to market changes.
Additionally, this gradual investment strategy builds confidence among stakeholders. Demonstrating progress and refining your product fosters trust that can drive your project forward.
Ultimately, embracing an iterative approach enhances product quality and boosts your chances of success upon launch.
