This is Post No. 4 in How to Start a Business Series.
One of the biggest myths associated with entrepreneurship is – that entrepreneurs should be risk takers.
I don’t think the ruckus you make in the world requires you to be a jerk. I think it’s possible (and productive) to take small financial but large emotional risks, and when things don’t work, you’re not homeless. Bringing your stress home is a choice, not a requirement.
Those who think that entrepreneurs should be risk takers – guess they have never heard about validation.
If you validate your idea, you lower your risk and increase your chances of success. You make sure that your energy and time is not wasted.
What is validation?
It is simply taking your business idea to your potential customers and asking them whether they will they pay for the product or services built around this idea. If enough people say that they will pay for it. that means your idea is validated to be converted into a business project.
I do not know about you but i am not a big risk taker. I love to take initiative and make a lot of new beginnings. I also do not fear what others will say.
In my entrepreneurial journey, I am mostly driven by instinct. My projects were not always validated. May be that is why I failed at times.
Back in 2009, I started FreshResume because there were already people paying me for a similar service. So the idea was already validated.
But for one FreshResume, there were many projects that are still in the box. They are there for many other reasons but also because I never took an effort to validate them.
Then there are ideas that I validated but did not get started with. One such ideas was to start an ecommerce store for ladies – focused on beauty products. I interviewed many of my potential customers asking whether they will pay if i started this, and almost all of them said yes. Here the problem was not validation but inaction. So validation alone cannot make you successful. You need to take action.
Back of our topic here…validation.
I did not always know what validation was. Heck i did not even know .. that was a word called “entrepreneur”. As a teenager, I started XpertMinds, without surveying people and without asking my potential customers (students) whether they will pay for it. I started because that is the only customer demographics I knew a bit about. Also I was not exposed to the potential of the web. In that scenario my customers could only be who I can see and meet personally.
I borrowed money from my father, and promised that I will return it soon. I never did that. But it got me started. I was bitten by entrepreneurial bug for ever.
So at times as they say “ignorance is bliss”.
Now, unless it is a hobby that i am ready to invest money in without getting anything in return, I validate.
Right now I am building a course for first time entrepreneurs. This series about starting a business emerged out of that course. I did not start working on it, unless I had people telling me that they will pay for it. Right now there are more than 50 people who have said that they will pay between $10-100+ for the program, a total of about $3000 in potential revenue before I launch it. These are all people looking to start a business. Zero promotion. I just added a form to a post that receives good targeted traffic. So I have ready customers before I even start building the product.
That is the power of validation.
Validation starts with asking people – what do they think about your idea. People may say it is good. But you will get the real answer – when you ask if they will pay for it.
If 20 or more people say that they like what you are thinking and plan to build and will pay for it – go ahead and make the product and service.
These people agreeing to pay – means that your ideas has been validated to be converted into a business.
For validation you do not need a name. If you think a name will help – then use a working name – any relevant name that comes to your mind.
You need not think about building a website at this stage.
You can offer a pricing but it is not essential. You can infact ask for a price from people you survey, like I asked in the form above. For example if you ask someone to buy your project management app and if they say yes – you can always ask, what will you be willing to pay for it? This way you can get your launch price.
After validation you can get to product building or building a service bundle if it is a service – to sell.
Action for Today: Make a half page document about your idea (what it will do for customers) and a list of prospective customers (your colleagues, your friends from school, college, alumni network, facebook friends, LinkedIn connections, people you communicate with our emails). Now start talking to these people about your business/product.
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