Idea validation is a strategic move you need to take before you start implementing a business idea. It lets you better understand user needs, saves time, allows you to set the right direction of development and pay for what is really necessary.
An optimist will claim that one can definitely tell if a business idea is successful. A realist validates the claim.
By validating the business idea, you reduce the risk of failure and increase the possibility of success. What is more, you eliminate conceptual mistakes and develop an effective business model.
How to test your ideas and scale the testing process in your own team and organisation? Our experts explain every detail of the processes.
Here you will learn about:
- what is business idea validation
- idea validation process and elements
- concept validation results
- how to implement a good idea
What is idea validation?
Idea validation consists of a few activities that test if a given idea is good. It is searching for an answer to questions like:
- Does the product/service you want to create fulfil clients’ needs?
- Is it going to be profitable?
- Does the planned business model suit the market reality?
- How much will the idea development cost?
- The idea validation process may include, among others, customer profiling, research of the potential market, communication and sales channels research including keywords research and benchmarking, prototyping, etc. - explains Przemysław Machlowski, Business Analyst at Skyrise.tech.
- These activities are related but do not have to be consecutive. The process is often agile – the initial findings influence further questions and hypotheses, which are in turn researched and tested. The idea validation is a part of a more general ideation process: first, we collect data, then analyse it and then draw conclusions and build on top of it - he adds.
Depending on the scale of your idea, validation may take hours, days, or even months. However, considering that in return you get key information, it is worth taking the time.
Business idea validation elements
- Client/target group profiling
Who are your prospect clients? What needs do they have? What are their top-of-mind challenges? How much are they willing to pay for solutions to certain challenges?
- Market potential research
How many customers are there potentially?
- Competition research/ benchmarking
How right now are customers handling the challenges that you want to help them solve? Who are your competitors? Is there already a similar solution on the market? What are competitors’ weak/ strong points?
- Identification of market entry barriers
Is your business regulated by law? Do you need permits? How complex is the buying process of your potential customers? How much compatibility with external systems do you need for your product to work successfully?
- Communication, sales and distribution channels
Where do customers look for a solution to the problem? How do they talk about it? What keywords do they use? How do they compare solutions? How easy it is for them to make the buying decision?
- MVP – creating a product prototype
How much functionality and which functionality is just enough to deliver value to the customers?
- Partners and reliance on 3rd parties
Who/what do you need to rely on to build your solution and effectively approach target markets? What risks are associated with these dependencies?
- Cost estimations
What are the resources, and estimated expenses associated with the implementation of the idea? Do you need to hire additional staff?
- Financial simulation: revenues vs costs
Do you have the appropriate resources? Will the forecasted revenues cover the generated costs? What model of revenue stream can be the most effective?
- Testing MVP with users
Do the customers like the idea? How do they react to it? ? What needs to be improved? Conversations with the target group will confront your assumptions with facts.
The elements mix with each other. However, despite this fluidity, you get a clear answer about the idea’s prognosis.
It may seem that MVP testing is the most valuable step in validation, but it is not. Each stage is equally important because it brings you closer to the picture of reality.
Concept validation results
- After validation, almost every idea changes its original shape. For example, many ideas make little sense when confronted with the reality of how customers operate. On the other hand, you can develop new values and build an entire business model upon them - comments Natalia Pięta, UX researcher and consultant at Skyrise.tech.
- This was the case with Medim. They came to us with an idea that had a prognosis of being unprofitable. However, after deeper research, we were able to propose an alternative idea, thanks to which Medim is successfully developing the company - adds Pięta.
The business idea is not to be a visionary concept for changing the world, but a solution to real customers’ problems. Of course, having a vision is important – but being able to start small and redefine the vision if needed is a far more important success factor.
The validation results we can divide into:
- Positive - your idea is good, customers will benefit from it
- Negative - your idea is not good, it does not deliver value important for the target group
- To improve - your idea needs to be modified so that customers can benefit from it
If the result is positive, you can start working on your product/service and business model to bring the idea to life.
If the idea is rejected, it is also a positive message. You have just saved time and money that, without verification, would be lost while developing a product that had no bright future.
Idea implementation. Business model canvas
A good business idea is half the battle. The other half is building a business model based on values and competitive advantage.
- To effectively develop our clients' business, we work with Strategyzer’s Business model canvas methodology. Together with the customers, we develop nine foundations for a given business idea. Nothing is left to chance. On one canvas, the client can see the entire business idea - explains Jarosław Pilarczyk, CEO of Skyrise.tech.
On canvas, you will find everything you need to create a value-driven business model.
- Customer Segments - different groups of people and organizations that the company tries to reach and serve
- Value Proposition - a collection of products and services that generate value for a specific customer segment
- Channels - the way the company communicates with the various segments of its customers and provides them with value proposition
- Customer relationships - relationships that connect the company with representatives of a specific customer segment
- Revenue streams - the amount of funds generated by the company in connection with servicing each of the market segments
- Key resources - resources necessary for the proper operation of the company
- Key actions - actions that the company must perform in order to operate efficiently
- Key Partners - suppliers and associates with whom your business operates efficiently
- Cost structure - all operating expenses
Idea validation service
Skyrise.tech is a trusted software development consultancy company. We validate and develop business ideas for our customers in a structured manner.
Our experts focus on gathering data and facts.
We were recognised by Forbes and the Financial Times as one of the fastest-growing companies in Europe.
Create innovative ideas, but do not forget to test them. With the idea validation at an early stage, you create solutions that meet the needs of customers. You can then use a business model canvas and refine the nine pillars of the business.
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