How to validate a business idea with no budget

validate idea, product market fit

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We all have that “Eureka” moment. This is when we think: “I just thought of the new Facebook or Airbnb, and this baby will make me millions”. But, how do we know that the idea can stand the test of time and other people? After all, there is a reason why 90% of startups fail. Ideas mean nothing without execution and a product-market fit.


Follow these steps before you decide to spend all your time and money on a product/service that you thought of. (We will call this product/service “A”).

1. RESEARCH YOUR MARKET FOR YOUR IDEA

You need to consider the following:

  • Does your “A” already exist?
    A simple Google search can break your dreams in 5-10 seconds, but it can also save you a lot of money. If the answer is “yes”, proceed to b) below. If the answer is “no”, proceed to “2.”.
  • Does “A” exist in your market?
    Your market in this context means location.  Just because someone already sells vegan sausages in New York, doesn’t mean you can’t sell them in York.
  • Is your market big enough?
    Just because your mom says that she would use “A”, it doesn’t mean that many other people would. Easiest way to test this – see what other similar “A’s” are out there. If they have thousands of customers, then the market is clearly there for the taking. Alternatively, look for many people demanding “A” – that is an ideal scenario, which we discuss under “FEEDBACK FROM YOUR FUTURE CLIENTS”.
  •  If similar products/services already exist, how is “A” better?
    Unless “A” is completely unique, which is unlikely, you need to be 10x better than the competition (this may be considered a number one advice from Peter Thiel in his “Zero to One”). Not 2x. Not 5x. It has to be 10x if you really want to disrupt the market and be profitable.

2. FEEDBACK FROM YOUR FUTURE CUSTOMERS

Feedback is where it all starts. If your future customers are not interested in “A”, then why even start selling it? It may seem simple, but if no one buys it, you make 0 money. LET ME REPEAT. If no one buys it, you make NOTHING. This is why it is essential to first find out what sort of demand there is on the market for “A”.

This can be tricky. The easiest thing to do would be to ask your parents, wife, friends or neighbours whether they would buy/use “A”. This is what so many “online gurus” recommend you do. They are not 100% wrong. However, keep in mind that your friends and family may not be your target audience. If you are planning to sell laptops with no keyboards, chances are, a lot of your less tech-savvy relatives would not see the benefits straight away. Which brings us to the next point.

Who would be your ideal customer?

Are you planning to sell “A” to teenagers in public schools in London, or to housewives in Mexico City? Are your customers high-earning individuals or small local businesses? How many kids does your customer have?

Or are you planning to sell to everyone? STOP. DON’T DO IT. If your audience is not narrow enough, you will fail. Start small. You can grow it at a later stage. Decide what your starting point is.

Can you easily get feedback from your ideal audience?

You have narrowed down your audience. Good. Now, where can you talk to them? Do they often visit a specific forum/FB page or other blogs, where you could ask them for that priceless feedback?  Do they hang out in coffee shops? Do they sit around in parks?

If you can’t have their feedback, you don’t know what they want. Collect feedback, record it (get your free excel template here) and use it.

Feedback can also be “taken” from your future customers, by looking at similar products’ reviews online. Do you see a lot of clients complaining about the haircut they got at “Y”? What were the main issues with the haircut? How could you improve on their experience with “A”? If you manage to find this kind of feedback and explore it further, you will get a good idea of what you are facing. You won’t even necessarily need to ask a direct question to your future customers at the start. The above would be more than enough to validate your idea.

3. HOW EASY IS IT TO GET THE FIRST CUSTOMERS

You have gathered all the feedback you need. Your idea is unique to your specific market. Good.

Now, the last piece of the puzzle – can you get the first customers to try out “A” without having to pay for any advertising? Where can you find what is called the “early adopters”?

This is linked to the first two steps. Try to convert the people who gave their feedback into potential customers. Where possible, follow up on their feedback. Are there any specific locations that you could visit, where you could offer samples of “A” to customers? Perhaps you know someone in the industry who could introduce you to potential early adopters?

If you manage to find first customers organically, this will help finalise the validation process. Organic customers mean that there is a demand for “A”. If there is demand – you can become the “supply”.

Tip: If you managed to engage some of the early adopters on various forums, then you can always ask them to have a look at your website. Don’t attempt any hard sales. People don’t like that. Just ask them for honest feedback on your product or service, and if they are that passionate about the product or service, they will pay for it (you can also always offer free samples, but don’t fall into that trap right away).  

IN CONCLUSION

By doing all the above you can validate your business idea and see if it is worth putting your time and effort into. More importantly, if you go through all the steps you will also validate your own motivation and whether you are ready to engage in this project long-term. At the end of the day, if you are not motivated by what you are doing your business will eventually fail. Engaging with each of the above steps takes time and dedication, and so you can test yourself throughout this process. Don’t waste your time on something you don’t love doing. Good luck.

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