One of the most common intimidating things with entrepreneurship is that many people are first-time entrepreneurs. The serial entrepreneurs already know the ins and outs of the initial process associated with entrepreneurship. There is no fixed way of starting a startup, as every sector and market are different. As a first-timer, it might seem hard for a potential entrepreneur to test his/her own startup ideas. One of the key ways to overcome this initial barrier is through testing and validating the startup idea. Here is a step-by-step guide for the market validation process.
Why is it necessary to test the startup idea before starting the business?
Prior to understanding the necessity of testing a startup idea, it is important to understand what market validation is. The term ‘Market validation’ refers to the simple process of assessing whether the startup product or service is in demand in the market. A product might be a great fit in a niche but if there are not enough buyers for the product, it is ultimately slated to be a failure.
Testing the startup idea gives first-time entrepreneurs and often serial entrepreneurs a detailed insight into the product demand in the market. A product or service fails because of three things – lack of planning, lack of marketing, lack of custom-tailoring. Testing and validating the startup idea helps to eliminate all of these scopes and eventually drive up the success rate.
Best ways to test and validate a startup idea?
Pen out the product outline
Many people confuse the product outline with a business plan. In reality, a business plan is a dynamic tool that is susceptible to many changes. A product outline is more like an answer to certain questions on which the foundation of the startup will be based.
Think of the things the product or service aims to achieve. Who is the target customer for the product? What utility will the product bring in the market and to the customer? Does it solve a problem enough to generate a market cap? What is the minimum viable product of the startup? These are just the basic questions when it comes to drawing a product outline. It helps to effectively plan around the product and customer and build a better connection among them.
Conduct a survey
Market surveys are a key part of every stage of any startup. It is important to take note that customers and their tastes are dynamic. It is not going to stay constant over time. As a result, the business plan of any startup needs to be molded and upgraded accordingly.
A customer and market survey will help an entrepreneur assess the demand for their product as well as market competition for the product. Furthermore, it is a great way to assess whether a market is already saturated or not. Understanding the needs of the customer will help to better tailor the product to their needs.
Know the market competitors
It is important to find out the competitors in the market. There might be sufficient demand for any product but what if the competitor is a multi-industry conglomerate? They will have far more resources to better manipulate the market.
But that does not mean it should deter someone from entering the market. The competitors can act as a good insight on how a product should be designed, how to market the product and target customers. Instead of getting deterred by competitors, potential entrepreneurs can get better insights from their business models and marketing techniques.
Create a Value Proposition
Too many startups these days focus on product features compared to value generation. Instead of stuffing features that the customer might not need, the right approach is to generate value for them. In simple words, highlight the value generation in lieu of features. People are motivated by productivity and the idea of value generation will help the customer to respond in a better manner.
Use Product Hunt
Product Hunt is an amazing platform for up-and-coming startups. If you are just getting started with entrepreneurship, Product Hunt can be a great place to see how well your startup ranks among the customers.
The platform is like a social hub for startups. Here users get to understand your product in its initial stage and decide whether it adds any value to them or not. It is possible to categorize the target customer and many more on the platform. In addition to these, aspiring entrepreneurs can easily conclude market acceptability through the platform. More details here.
Create a landing page
In this day and age, online marketing is one of the most effective business strategies. Almost everyone seems to have some form of internet connectivity. Depending on the nature of the startup, it is better to create a “Coming Soon” landing page. This will have a triple impact on the business – draw the attention of the customer, assess product interest and initiate a brand valuation.
Once marketing is done through the page, it becomes easier to check the buzz around the product through analytics.
Create an MVP
All of the above processes are meant for superficial market assessment. But a customer needs to see and use a product to deliver their ultimate verdict. This necessitates the need for a market viable product (MVP).
In the pre-startup stage, the MVP can be launched to a limited customer base to assess their feedback. The real-world product usage will help the customer make a more informed decision and ultimately either discard or validate the product.
Find the gap between liking the product and buying the product
There have been several scenarios where a product has been liked by a great many people but when it came to product launch, not many people were buying it. Why so?
It is mainly because of dainty features. These features can be better classified as something good if they exist, but will not make much impact if they are absent. A startup needs to refrain from falling in this category as it will give entrepreneurs false understandings of the market. Rather the approach should be a value proposition focused on creating utility for the customer in mind.
Testing and validating a startup is very much important to ensure its sustainability in the long run. This often acts as the make-or-break factor for any business. Properly assessing the market before making market entry will help to ensure profitability and business survival.