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How to Test Your Business Idea?
Either you found an old note you wrote or a new business idea just clicked and you are planning to act on it, you’ve stepped on the 1st rung of the ladder leading to a successful business. But, how do you know that’s where the ladder will take you? To ensure that, you need to evaluate every step, in this case: test your business idea.
To understand or test anything, it is crucial to ask questions: what, why, for whom, and how? Your idea covers up the ‘what’ of it. By the end of this article, you will have clearer answers to other questions too.
Step 1 – The Problem
As we are surrounded by so many ideas and businesses, it’s important to know how to not be one of the ‘plenty’. To rule out the risk of your idea not being accepted, let’s step into the question: why.
Why should anyone care for what you bring to the table?
Your potential customers are not going to give a minute (let alone paying) unless they get something out of your product/service. To keep that in check, the foremost thing to do is solve a problem. You don’t have to be necessarily solving 3rd world problems to have a successful business (although, if you are, great!). For instance, if your business idea is associated with the entertainment or gaming industry, then you are reducing boredom.
Why can only you solve this problem?
There should be a reason why you and the problem match. Is this problem something you’ve faced or had experience in dealing with? Or are your skills more than suitable to deal with the problem?
If you are unsure about your idea or the problem that it solves, research about entrepreneurs who are solving similar problems and how they do it. Many entrepreneurs keep an idea-book, however, it would be helpful to keep a problem-book to generate better ideas.
Step 2 – Set Your Priorities and Efforts Right from The Beginning
Eric Ries, the founder of IMVU, explains how to understand customers in his book, The Lean Startup. Working as a Chief Technology Officer in the company at the time, Eric and his team put in crazy efforts to research and combine two dimensions: 3D gaming and instant messaging. Also, they toiled to subsume major messaging services into the product. However, at the time of the product launch, as a shock to Eric, no one downloaded the product.
After interviewing their target customers they found out their product did not match what users really wanted. Although, Eric’s efforts and time didn’t turn out to be a complete waste as that is when he learned an important lesson: the importance of user-centric products.
Also read: 8 new books that can change your life
As an aspiring entrepreneur, you don’t need to put in numerous months and extreme efforts to find out if your product is something that people want, you simply need to answer another question: for whom.
Customer is the king
For whom are you creating the product/service?
While your business card may have your name on it, the real crown is always on customers’ heads. User unfriendly products cover up 17% of the total causes of failure in business. Therefore, make sure they are your priority and your efforts are inclined accordingly. Also, I cannot emphasize it enough: customers want transparency and authenticity. Sooner or later, they can see which businesses are money-centric and which thrives using a user-centric approach.
Step 3 – Don’t assume, ask
While that is a piece of the great advice we’ve all heard, it’s time to put into businesses. It is a good idea to start your business by striking out what you think you know about your target customers. Assuring you they will buy the product before the launch is one thing, but reaching out to their pockets when the time comes is completely different. Having said that, the key lies in answering the last and another important question: how.
How to know what your customers really want?
A mistake highlighted by Eris in his book, The Lean Startup, is that they assumed what their customers wanted. Later on, in the interviewing process, he realized he didn’t have to wait for 6 months or had to create a whole product, Instead, you can tap the market practically by using MVP (Minimum Viable Product).
It is where you create an affordable and early version of the product to know your customers and test your business idea. There are 2 ways to create an MVP:
Concierge MVP: This is an easy and labor-intensive technique to highlight the line between assumptions and actual customer needs. Many big shot companies like Airbnb and Zappos used this MVP style to test their business idea. It involves reaching out to target customers and others in the network to gain their perspective regarding the product/service.
Smoke Screen MVP: In this technique, you market your product without actually having to create it. For example, a 2-minute animated video explaining what product is and why to buy it, or an ad to pre-order your product. It will give you a crystal-clear and evident idea of how your business might do.
While considering results from MVP, make sure:
- You focus on behavioral patterns of interviewees and not their opinions.
- Consider target users who are associated with the problem you plan to solve.
CEO of Y Combinator, a company worth $80 billion, Michael Seibel, says “if it takes more than a month to build, it’s not an MVP.” He also points out how falling in love with your MVP is a bad idea, as it creates high expectations. Thus, it will lead to hurdles in changing the product according to inputs by customers on MVP. According to him, it is better to be dedicated to your target customers and the problem that your business tends to solve.
While considering all the above steps, remember your initial idea doesn’t have to be a break-through. Ideas, like anything else, take time to develop and are changeable according to circumstances. Also, it is more than important to connect to your gut. It is your business idea, trust your intuition regarding it.