For the validation of an idea, executives take a strategic approach to a business. Planning strategy and tactics is a key part of their work in addition to oversight of their direct reports and supporting staff. While time is a premium for all staff, it is very important that good use of an executive’s time is kept in mind and planned accordingly before meeting to discuss data requirements and to maximize the output of stated data requirements. Here are few ways you must keep in mind while validation of a business idea:
1. Determine which of your ideas already exists: You may have an amazing idea, only to realize that there is another company doing exactly what you propose. The easiest way to see if your idea exists is via an online search. Let us say your idea is for a subscription gift box service for fish enthusiasts. You would Google “subscription gift box service for fishing” and would see that Mystery Tacklebox already exists. That’s not to say you can’t start a subscription tackle box service, too, but my advice is to pursue an idea that doesn’t have any competition yet, unless you think the competition is doing a poor job (e.g. they have a bad website, horrible customer service, or awful reviews). After you search for each of your ideas online, delete any ideas that already have robust competition.
2. Rate your remaining ideas based on these three attributes: Investment cost, personal interest and potential profit. Look at each idea of yours and assign three separate numbers to it based on this scale.
1. Investment Cost (on a scale of 1 to 10): 1 (will cost you over $2,000 to launch), 5 (will cost you $1,000 to launch) or 10 (costs less than $200 to launch)
2. Personal Interest (on a scale of 1 to 10): 1 (if you are not interested at all in the idea aside from its potential profitability), 5 (you’re somewhat interested) or 10 (you’re very passionate and excited)
3. Potential Profit (on a scale of 1 to 10): 1 (less than $10K in annual profit), 5 ($100K in annual profit) or 10 (over $500K in annual profit)
After rating each idea with these three attributes, add up the total for each idea. Rank your ideas from highest total score to lowest total score. Focus on the ideas with the highest total score.
3. Forecast your revenue and expenses for your top ideas: Create a simple spreadsheet for each idea. On one side, estimate your revenue. On the other side, estimate your expenses. You will have both overhead and operating expenses. Overhead expenses are costs that do not change based on the quantity of products or services you sell, i.e., incorporation, insurance and internet. Operating costs are costs associated with making a product or providing a service, i.e., cost of materials or shipping. Using your forecasts, you can get a better sense of profit for each idea.
4. Get feedback from family, friends and potential customers: Pitch your ideas and see which ones they like the best. You can set up a free survey using Google Forms to send to your contacts. Since your friends and family might be biased, you also want to pitch to people you don’t know. You should talk to real potential customers about their needs, wants and expectations.
SurveyMonkey offers an Audience tool that lets you send a survey to a targeted panel of consumers. Here are some starter questions to ask in your survey:
Identify your target demographic
1. What is your age?
2. What is your gender?
3. Where do you live?
4. What is your household income?
5. What is your profession?
6. What is your education level?
Assess market and pricing
1. Would you use this service or product and how often?
2. What do you like about current products or services currently on the market?
3. What do you dislike about current products or services currently on the market?
4. What concerns/questions would you have about this service or product?
5. How much would you pay for this service or product?
5. Examine your rankings collectively: Your total score from Step 2, forecasts in Step 3, and feedback in Step 4 should help you identify the strongest ideas on your list. Hone in on your top one to three ideas.
6. Set up consumer tests to validate your remaining idea(s): This step is critical and will save you money and time down the road. Before you spend all your money building an app or stocking up on inventory, make sure a significant number of customers will pay for your product or service. You will have wasted money, time and effort if enthusiasm expressed by family and friends does not correlate to market potential. Several of my ventures failed before I even started because I did not perform consumer testing. The dictum, “If you build it, they will come” does not hold true in the entrepreneurial world. Based on what your business idea is, there are several ways you can test it.
Besides if you do have any questions give me a call: https://clarity.fm/joy-brotonath