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How To Test a Business Hypothesis and Customer Validation

Discussion in 'Planning Your Business' started by Collins, Jan 9, 2017.

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  1. Collins

    Collins Member

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    Hello,

    It is my pleasure to be on this forum. For about two years now, I have been nursing a business idea that has the potential of benefiting some persons. Some months back, I read about the importance of testing every business hypothesis before the entrepreneur launches into a venture. May I please know the most reliable ways to go about this testing in order to facilitate success in business? This questions bothers on business hypothesis, product validation and customer validation. Any idea will be greatly appreciated. Thanks.

    Col
     
  2. Josephine Stuart

    Josephine Stuart MVP Member

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    Hi, @Collins !

    I think a great way to "test out" a business idea is simply to talk to other people about it. Find your target audience and speak to them (preferably in person, but also over email and social media) about your idea. Does it solve a problem they currently have? Is it worth your proposed cost? What changes would they make to create a more valuable product or service? That feedback allows you to better understand whether the idea is worth pursuing, and if so, what you need to tweak in order to succeed.
     
    JohnHolling and djbaxter like this.
  3. Collins

    Collins Member

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    Thanks a lot. I will do as you have said. I appreciate you greatly.
     
  4. Freelandshaw

    Freelandshaw Member

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    Hi @Collins !

    First off, congrats on deciding to move forward with a new venture! It's definitely an exciting time in life when you decide to create value for others. I also applaud your willingness to be thorough and think things through. Many times people rush into situations thinking they have a great idea only to be disappointed when there is no excitement for it in the market. I LOVE what @Josephine Stuart said. I'll just add some things from my perspective.

    1. A good place to begin is an initial value proposition. You will need to boil your idea down to a few things: what it is, who it is for and what problem does it solve for them? Your value proposition can be considered your initial assumption regarding a target market. For example, "Our mobile app helps ice cream parlors save money by reducing the number of broken ice cream cones."

    There are some assumptions with that statement:

    A. Ice cream parlors would use a mobile app
    B. Ice cream parlors want to save money
    C. Broken ice cream cones causes a loss of money for ice cream parlors

    2. Once you have a baseline understanding of what value you bring. You will want to clearly list your assumptions (like above). Once you do that you can begin crafting interview questions for your target customer base. As mentioned, in person is the best way to conduct an interview. If you can't do in person Skype or another virtual face to face interview is suggested. One reason is that about 90% of communication is non-verbal so you'll want to be able to get those queues. Another reason is you would like it to be a conversation rather than just a survey. You will want to follow up with certain questions and dig deeper when possible. Your questions should be fairly open ended (not yes or no) and you don't want to mention your idea until the end of the conversation.

    3. As you conduct your interviews you will get a sense for the real problems and pain points of your potential customers. It will also help you validate or dispel your assumptions. As you do that you can adjust them as necessary. Also, make sure you pay attention to the language they are using to describe things. As you get deeper into validation and marketing you want to replicate that language to truly connect with your customers.

    4. Once you really get a feel for your target market and the problems they have, you can start showing them your solution. It can be very simple and not even have all of the features and bells and whistles you envision your final solution will. Let them play around with it a bit and let you know what features and edits would be useful to them. Again, make adjustments during this process as necessary.

    5. True product validation begins later in this process. The ultimate validation comes when someone is ready to give you money for your solution. Once you have a solution that's fairly refined, you can use several platforms for validation. A landing page, full website, Facebook ads, a fruit stand on the side of the road, whatever you can use to get your solution in front of someone. If they click a buy button, pre order or pull out their wallet you know that your idea is worth something. If not, you know that either your messaging or product is not connecting.

    There's certainly more detail that can be shared. It's a very fun and frustrating process . Please let me know if anything I said doesn't make sense or needs more clarification. Good luck my friend!
     
    Ciaran, JohnHolling and djbaxter like this.
  5. djbaxter

    djbaxter Administrator Moderator Member

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    JohnHolling likes this.
  6. Collins

    Collins Member

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    Thanks a lot. I appreciate your detailed response.
     
  7. Collins

    Collins Member

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    I appreciate you greatly.
     
  8. Collins

    Collins Member

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    Thanks a lot. I appreciate your counsels
     
  9. Jessica Danes

    Jessica Danes MVP Member

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    Before I start working on any idea I have for my business or for a new one, I do all the research I possibly can. Has this been done before? Is this idea very similar to another? Who and where would this idea would benefit the most? What would the proposed profit be? Will the profit outweigh the cost? Is the profit reasonable? Once I know go through all my questions, I ask my business partner, my parents, my significant other, and my closest friends. Often, they have more questions and can help me decide if the idea will sell or not. If my team and I think it will sell, I try to make a prototype to test out among customers and friends for a few weeks, receive feedback, and, depending on the feedback, either make the idea come alive or put it in the "Save for Later" pile. Never throw out an idea permanently, and write everything down.
     
  10. Collins

    Collins Member

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    Thanks a lot. I appreciate your counsel
     

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