Before you start a business, ask yourself – ‘does the market want my product or service?’
One of the primary reasons businesses fail is because they skip this step and pursue a product or service the market doesn’t need or want.
The validation step includes clarifying your business mission, researching the market and understanding your audience. As you progress through your research you may adjust parts of your business, be surprised by a new target market, or deepen your business mission statement through increased market understanding.
Define your business mission
Your business mission is both the beginning and the end of the validation phase.
In the beginning, it may be more like an aspirational goal. It starts with your idea and what you hope it will achieve. A hypothesis if you like. Soemthing that articulates your assumptions about who your product or service will help, how it will help, and what benefits they will gain.
The validation stage is a time to review your competition and articulate what you perceive as your unique selling point. But most importantly, think about why you want to start this business. Your ‘why’ will play a big part in how you run your business right from the beginning.
As you proceed through your market research and develop a more thorough understanding of your audience and their needs, you may confirm or discard parts of your mission. By the end of this phase, you will have a clear mission articulating who you help, how and why.
Do your market research before you start a business
Market research is the cornerstone to successfully validating your business idea. This is where you test your initial mission statement against market trends, gaps and competitors. Where will you fit, how are you different and do people want your offering?
You can gain some insight from quantitative research like polls or analysis of existing data, but the real research gold is usually from qualitative methods. Getting out and interviewing your target market individually or through focus groups will give you invaluable insights into their motivations, opinions and emotions behind decision making.
Don’t let yourself get stuck here. Set a practical sample size, conduct your research, and then analyse it and move forward.
Understand your audience
Use the information obtained through market research to create detailed customer personas. Consider age, location, other interests, and anything else that might help locate your customers. Are they local to you? Do they spend a lot of time on social media? Do they have a lot of disposable income?
Review the information you obtained during market research and determine the pain points and unmet needs of the people you spoke with. Knowing as much as possible about the people most likely to purchase your product or service will help you market to their needs.
This is an opportunity to interpret your findings against your hypothesis. Don’t just look for supporting data. Pay attention to the learnings from those who contradict your assumptions. Sometimes you can bring them along with small adjustments and expand your market.
Revisit your mission and re-test any changes
As promised, the final part of the validation phase is a return to your business mission. Do you need to alter your product or offering to achieve your mission? Do you need to adjust how you wrote your mission to reflect the feedback you received? Was your idea validated?
You might consider repeating the process and testing if you have made significant changes. You may be ready to proceed immediately if you made small, clearly aligned changes based on feedback.
Remember that market research is an ongoing process. Consider a version of research for each new product or offering. Consider if your mission statement still serves your business every few years.
Even in tough times there is plenty of market share for innovative new solutions to problems if you understand your market.
Sometimes it helps to engage someone slightly removed from the business to help with validation of your idea. Sage Business Coach Raffy Sgori can help. Book a free discovery call now.