Jake Hare is the founder and CEO of Launchpeer.
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Ask the average person to describe the essential steps in founding a startup, and they’ll likely give you some version of the following:
Step 1: Come up with a business idea.
Step 2: Pitch your idea to investors.
Step 3: Create your product.
Step 4: Sell your product for a profit.
Ask a successful entrepreneur the same question, and they’ll add one crucial step: Validate your idea. This comes before sales, before product development and before fundraising. You could even argue that validation comes before the idea. Before you create a solution, after all, you need to verify that you’re solving a genuine problem.
Validation is the difference between success and failure for a huge number of would-be entrepreneurs. If you want to create a thriving company, validating your idea should be priority No. 1.
Validate your market.
You can build the most brilliant software in the world, but you still won’t have a successful business unless people are willing to pay for it. That’s why savvy founders don’t start with a product. They start with what entrepreneurs call the “pain point”: something annoying, unsatisfying or difficult that people bump up against in their daily lives. Great business ideas begin with terrible pain points.
Chances are, you already have some idea of the pain point your startup is targeting. But you need to confirm that it’s a pressing issue for lots of people. Otherwise, you could spend a lot of time and money building a product only to find there’s no market for it.
Validating the pain point begins with lots of conversations. If you have a business-to-consumer idea, talk to anyone and everyone: friends, family, people at parties and strangers in online forums. For business-to-business ideas, reach out to public figures in the industry and strike up conversations at networking events. Bring up the pain point and listen to what people say.
Ask open-ended questions. Try to get people to describe how they’re currently solving their problem, why they do it that way and what’s frustrating about it. This will often lead to important insights about how to build your solution.
If you can’t find many people interested in griping about your pain point, that could mean there’s no market for your idea. Go back to the drawing board and pick a different problem to tackle.
Validate your pitch.
It’s important to validate your solution as well as your problem. If your idea won’t appeal to your target customers, it’s best to find that out while you still have the resources to pivot. So, start testing your sales pitch even before you have something to sell.
This could be as simple as getting people to join an email list for updates about your product. That’s a weaker signal than a purchase, but it does move the customer a little further down the sales funnel. Financial commitments like re-sales or crowdfunding pledges are even better. The key is to give people a way to act on your sales pitch.
There are lots of ways to put your idea in front of potential customers. Common approaches include online ads, cold emails, pop-up events, social media campaigns and viral marketing. Try a number of different tactics to find out what gets people to your landing page and motivates them to take action.
This process can teach you vital sales skills and help you define your core market demographics. And the people who join your email list now can give you feedback and serve as beta testers during development. They’ll also be your best sales prospects when you launch.
Validate your product.
The real trial by fire for your business idea comes when you bring it to the marketplace. Your initial goal is to gather as much information as possible while expending the least amount of time and resources.
That’s why so many startup experts recommend starting with a bare-bones minimum viable product, or MVP. Boil the solution you’re offering down to its essence and see if your target customers will pay for it. If the answer is yes, you can build from there. If it’s no, well, at least you found that out before building a bunch of extra features.
You can often achieve this by handling tasks or providing services for your customers manually, rather than building out a complex product. My favorite real-world example is Airbnb: The founders got their start by renting out mattresses in their apartment. As long as customers can request and receive a service, it counts as an MVP.
This early product validation serves a few purposes:
• First, it continues the process of gathering data and feedback from your customers.
• Second, it shows you how much each user costs to recruit. That’s essential for pricing your services, coming up with a valuation and creating a road map to profitability.
• Third, it provides potential investors with concrete data showing that your business model works. It’s much easier to raise money for a functioning business, even a small one, than for an untested idea.
Validate every step you take.
Don’t think of validation as something you do in your startup’s early stages. Instead, treat it as one of your core business functions. Strive for validation before, during and after trying anything new in your company’s approach. The quickest way to turn a successful startup into a failure is to lose touch with what your customers want.
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