How to Find and Validate a Business Idea?

How to Find and Validate a Business Idea?

The two most important questions that haunt everyone who wants to start a new business are: “What can I do?” and ‘Will this idea really work?’ For a successful venture, not only a creative idea is enough; it also needs to be marketable, sustainable and responsive to user needs.

Coming up with a business idea is the first step in entrepreneurship. The source of the business idea can come from different areas such as consumers, existing businesses, distribution channels, government and research activities. Information from these sources can be inspiring for individuals with entrepreneurial competence. When choosing a business idea, two main factors are important: To choose a business that the individual loves and is competent in, and to analyze whether the idea meets a real need in the market.

1. Process of Finding a Business Idea

A good business idea should both play to the entrepreneur’s strengths and solve a real problem. This process requires a combination of creative thinking and research skills.

Starting out without knowing your own interests, specializations and passions can lead to ideas being left in the air.

– Review your hobbies: What are the activities that motivate you?

– Your specialties: In which areas have you received training or gained experience?

– What you enjoy spending time on: What can you do for hours without getting bored?

Your answers to these questions form the basis for potential business ideas.

Successful business ideas are often born from solving a problem. So analyze your environment and observe what problems people face.

– Which products or services are inadequate?

– What do you as a consumer find lacking?

– What are the challenges in everyday life?

Write down the problems and focus on the solvable ones.

2. Business Idea Development

The first idea that comes to your mind may not be feasible. This is why it is important to develop and mature ideas.

Write down all the ideas that come to your mind. Then filter them according to the following criteria:

– Does it solve a real problem?

– Is it similar in the market? If so, how is it different?

– Does it suit you? Does it match your passion and knowledge?

This filtering avoids wasting time and resources.

Every business idea should include a “value proposition”. In other words, what are you promising to your target audience?

– What are you offering?

– Who are you offering it to?

– Why should they buy from you?

Clear answers to these three questions will strengthen your business idea.

3. Validation Process (Validity Test)

No matter how much you like your idea, what really matters is how it plays out in the market. The validation process allows you to test your idea in advance to avoid wasting time and money.

Who will use your product? Without defining your target audience correctly, your tests will be invalid.

– Demographic data: Age, gender, occupation, income level

– Psychographic characteristics: Values, lifestyle, motivations of the target audience

– Behavioral analysis: Buying habits, channels they use

Create the most basic version of your product or service. With this MVP you can see if people are really interested in your product.

– Create a website or landing page

– Offer a free demo or limited featured product

– Pre-order or make a reservation

Getting feedback before developing a comprehensive product makes your job easier.

Once you have presented your MVP to your target audience, be sure to get their feedback.

– What was liked, what was missing?

– How is the price perception?

– How does it compare to competitors?

Accepting feedback with an open heart is an integral part of the development process.

Who are your competitors? What do they offer? How do you differentiate from them?

– Conduct a SWOT analysis: Strengths, weaknesses, opportunities, threats

– Examine pricing strategies

– Read user reviews: What do people find missing in competitors’ products?

4. Pivot or Continue

At the end of the validation process, analyze whether your idea actually works. Here three paths appear in front of you:

1. Continue: If the feedback is positive and the data supports it, you can move on to developing the idea.

2. Pivot: If the idea is not completely wrong but some aspects are not working, change direction (e.g. target audience or business model).

3. Give up: If it doesn’t resonate in any way, start working on a new idea.

4. Giving up with courage is also an entrepreneurial achievement.