Idea validation refers to the process of collecting evidence through experimentation to make fast and informed decisions. It is used to determine if a business idea is worth pursuing or not.
It is well established that a business idea should be validated before investing a significant amount of time and resources. So, to validate your business idea, following are the steps used by some of the best startup consulting firms:
1. Clearly Define Your Goal
Just like any other test, we need to define clear goals and objectives. In simpler terms, we need to decide what we want to learn and what aspects to validate. Your goal can be any of the following examples:
Problem: Is the problem you are targeting with the product worth solving?
Solution: Does your product really solve the targeted problem?
Functions: How do the core functions of your product works?
Business model: Is it viable and scalable?
Price: Is there enough demand for your product at the set price?
Even though these themes are common and important, these are only examples. The main purpose of defining the goal is to identify the most critical assumption related to your business idea.
2. Construct a Hypothesis
After figuring out the goal for idea validation, the next step involves developing a hypothesis based on that goal. A useful hypothesis is a testable statement that often includes a prediction.
The key here is to start with a key assumption. The most critical assumption would be the one that would most likely fail and would also have dire consequences. Generally, coming up with hypotheses isn’t that difficult, but what’s more important is to define minimum success criteria for the test.
3. Conduct Experimentation and Revision
After developing a hypothesis, only then can you start validating assumptions by running experiments. The point of experimentation is to find the fastest and cheapest way to test your hypothesis.
In other words, experimentation is done to test whether the underlying assumption is true or false. Often, the initial idea is just the starting point for a better and more refined idea.
4. Validate the Assumptions
In this step, you need to validate whether your assumption is correct or incorrect. If your most critical assumption is correct, and if your idea has potential, then you can start refining your idea. Although idea validation doesn't always guarantee a startup's success, it's the execution of the idea that will always play a bigger part in their success.
For someone who isn't lucky enough to have a mentor that can guide them through the idea validation process, they can choose to go with a startup consulting service.
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