How to Identify & Validate a Profitable Business Idea

As an entrepreneur, you may have to face numerous challenges while trying to get your business idea to work. An important aspect of starting a business is to know if your idea is feasible and has the potential to succeed in the market. Thus, it becomes important to validate your idea even before you launch your business because it can save you time, money and disappointments. Moreover, it will allow you to refine your idea or move to an even better one.

What Does Validating Your Business Idea Mean?

Basically, validating your business idea is getting to know if there is a demand for your idea and to move ahead with it. It is the process of finding out if there is a need in the market that is not being met by your competitors and finding out if people will spend money on your business idea. Thus, with honest market validation research, entrepreneurs can lower possible risk and reduce business costs in the long run. So, validate your business idea before moving too far ahead in your business venture.

One more advantage of idea validation is getting honest feedback from customers to prove the strength of your idea for crowdfunders, angel investors and banks when you look for funding. Your business idea validation can give you valuable information to understand whether your idea will meet customer requirements effectively and how you can market your product to attract your target audience.

Be Clear About Your Business Validation Goals

It can be a good idea to use the minimum viable product (MVP) a product with just enough basic features to gather feedback from early adopters. It is a very cost-effective way of testing your business idea, evaluating its effectiveness and getting important insights. By building and releasing an MVP, you can determine if there is demand for your product and fine-tune it based on user feedback. Keep in mind that an MVP does not have to be perfect because its main aim is to validate your idea and guide future development. For a clearer view, you should write down your business ideas and then use the validation process to test them. Your business instinct may be great, but you will have to be open to contradictions that the validation process may bring to your initial assumptions.

Conduct Market Research

Finding out the size of your target market is the key to determining your business idea’s potential for profitability. Remember that your market size will change a lot depending upon where you want your business to operate and the locations you want to serve. Market research can have two categories— qualitative and quantitative. Qualitative research centers on open-ended questions and exclusive individual responses, while quantitative research is basically assessing where the majority lies. The two together can be more effective in validating a business idea. Additionally, to decide the market size, you must look at your competitor sales data, businesses operating in your niche, market trends, the amount of market share your business could own and where your business fits in with your competition.

Research Search Volume, Keywords

To understand the potential market for your business idea is to look at consumer activity regarding keywords related to your idea. While using a search engine to look up a keyword, you should focus on the number of results your search returns. If a keyword brings up a large amount of monthly searches, it means that there is a possibility of interest in your product or service. But, if the search brings low volumes, it may mean your idea is not in demand. It can mean something else, too. Maybe, you are using a wrong keyword or your target customers are not aware of their need for your business idea. In that case, you can try using search terms related to your target customer pain points. Researching search terms can also give you insights into what words your prospective customers are using. It will help you decide on the terms to use in your product descriptions, website copy and social media communications to increase the chances of your business to be on the first page of search engine results.

Conduct Customer Validation Interviews

When you decide there is a need for your idea in the market, you can try to communicate with consumers directly, which can be in the form of interviews, online surveys, or focus groups with members of your target market segment. Ask questions about their motivations as a consumer, what needs and preferences guide their purchasing decisions and any other feedback they may be able to provide. You can also ask about the current solutions they use to solve their problems and what they feel could be improved upon.

Test Your Product or Service

Finally comes the time to let your consumers test your offering and see how it works. There are two types of testing—alpha and beta—that you can use. Alpha testing involves internal employees of your business testing the product or service to find out if there is any issue and to fix it before making it available in the market, while beta testing involves a group of outsiders to use and test the product and provide feedback on their experience. Since the ideas give you the opportunity to get actual feedback from prospective users, both tests are important for validating your business idea.

Start Small

If your research validates your business idea satisfactorily, you may want to dive in right away and start ordering inventory like there is no tomorrow. But, it would be wiser to begin small with the basic needs, such as a landing page and a crowd-funding campaign.

About the Author

Mr. Harish Jagtani, a philanthropist, visionary, businessman of Indian origin, currently based in Democratic Republic of Congo for more than 20 years now, is one of the most reputed business owners in the Indian diaspora as well as the entire expat business community in DRC. The business house caters to multiple domains, including but not limited to Domestic as well as International Air Cargo, real Estate and infrastructure development, healthcare, hospitality as well as CSR.

Coming from humble beginnings from Jaipur, Rajasthan, Mr. Harish Jagtani has come a long way in building this conglomerate with a strong and clear vision, sheer dedication and grit. Starting with a small job in sales, Mr. Harish Jagtani today is a proud and righteous owner of a fleet of airplanes and multiple businesses that cater to the basic and advanced needs of the people of Dem. Rep. of Congo in different sectors.

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