You dream to quit your 9 to 5 job, start a business, and be your own boss?
You think you have a good business idea but you are not sure if it’s rock solid to be successful. The last thing you want is to waste your time working on things that you will drop only a couple of months later because they don’t work. Right?
Remember this: Planning is good but testing is better. Especially when it comes to starting a profitable online business from scratch.
By the way, if you are still wondering about a good business idea for you, make sure to check out our post how to turn skills you already have into a profitable business ideas here.Our Free Workbook lets you brainstorm on your money-making superpowers with guided questions. Download your Free Workbook here!
So, if you want to become a successful online entrepreneur, it is key to do proper market validation before investing significant time and money into your business ideas. The times of building products behind closed doors and hoping the world will jump on them once they are launched are over. You have to focus on your market and your target audience right from the beginning.
This post will help you with doing just that. Here are the steps to help you make sure your business idea is something the world wants, before you launch it.You only need 4 Days to do it!
Since you are here, you might also like to read:
- 5 Steps to Start an Online Business from Scratch
- 8 Trending Business Ideas that Let you Work from Anywhere
📌 Save this post to your Online Business Ideas board on Pinterest! 📌
Day 1. Make a rough plan for your business model
You probably know this already, but having a good business idea is only one piece of the puzzle of making a business successful. Every good business idea needs a robust business model to stand on. A business model essentially describes how your business is making money.
There are in total nine elements that you need to carefully think through when working out your business idea.Here they are one by one for you.
1. Customer segment
- Who is your target audience?
- What are their biggest pain points?
- How can their lives be improved by you?
2. Value proposition
- How will you create value for your customer segment?
- What are the expected benefits that will result for your customer segment?
- Which product or service they will be paying for?
3. Customer relationships
- How will you interact with your customers?(e.g. single transaction or continuous interaction)
- What kind of relationship do your customers look for?
- Why will they trust you?
4. Sales channels
- Where does your customer segment hang out on (online & offline)?
- How will you reach your target audience?
- How will you generate leads, sales?
5. Revenue model
- How will you charge for your product or service?
6. Strategic business activities
- What actions do you need to take before launching your product or service?
- Which activities will you need to take after the launch, e.g. to promote and deliver your offer?
7. Key resources
- What or who do you need to develop your business idea?
- Which resources do you need to launch your business?
8. Partners
- Do you need partners to promote or deliver your product or service? Who?
9. Cost structure
- What initial investment is required to launch your idea?
- What fix and variable cost will you have after the launch to maintain your business?
You don’t need to break your head over all the details of your business model upfront. In the initial stages of your market validation, many business elements will be based on assumptions. That’s totally fine!
In the beginning, a fast run through the nine categories of your business model is more than enough. Be bold and make assumptions for aspects you don’t have clear answers to yet. Mark them as assumptions, so you know that they will need to be confirmed in the future. These will be your guidance for further market validation of your business idea.
Optimizing your business model is an iterative process. You will repeat this exercise a couple of times until all your assumptions are validated and your business model is bullet proof.
For now, your initial assumptions are sufficient to move on to step 2 of your market validation. This is what you will do in the second half of Day 1.
Day 1. Understand the market for your business idea
After you have a first rough idea of your business model, your next step is to take a close look at your target market. You don’t need to conduct a full blown market research of all your big and small competitors, but you should have a good understanding of how big your market is and how other players are generating business in your niche.
The first question to answer is how competitive your market is.
Are there many competitors? If yes, that means that there is an established market based on clear demand and a potential business opportunity for you. Although seeing existing successful players who are offering something similar to what you are aiming to launch might appear as intimidating for your business idea, you can breathe a sigh of relief. It’s generally an indicator for a healthy market.
On the other hand, if there are no or hardly any competitors, ask yourself why. Is your idea so innovative that the market is only in its baby steps? Or is there no demand for your business idea?
Next, think about how you can differentiate from your competition.
Your job is to create a plan for how you and your offer will stand out in this market. But how can you make a customer choose you over a competitor?
Having crisp differentiating value is very important to make sure you can rip off a slice of the pie for your business. Make sure that your unique advantage is clear and convincing to your target audience.In our Free Workbook, you will find questions to create a unique offer and messaging that stand outs. Access your Free Workbook here.
After you have a rough plan for what your business is, how you are making money, and how you stand out, it’s time to start building the core of your business: your ideal client base. This is the key focus of day 2 and 3.
Day 2-3. Get in touch with your target audience!
Do you know one of the biggest (and most frequent!) reasons why new businesses fail? Because they create seemingly sophisticated products with tons of fancy features, only to realize that at the end of the day nobody wants to buy them!
We can’t stress this enough: You need to get your idea in front of the eyes of people who will benefit from your solution, and you need to do it as soon as possible.
You have defined your customer segment and you have an idea where they are hanging out online and offline. Now it’s your job to get talking to them.Your goal is to eliminate all doubts about what your customers want and turn any assumptions you made about the wishes and needs of your ideal clients into facts. In this blog post, we break down how you can nail down your ideal client and turn their needs into a compelling online offer.
That’s why you need to involve them in this initial stage of testing your business idea and co-create your proposition together with them.Here are some ideas for how you can do a market validation of your business idea with your target audience.
Talk to your ideal customers face to face
It might seem awkward and time consuming to talk to strangers, but believe us, in-depth interviews are the most effective way to test the grounds for your business idea. Go to places your target audience is hanging out in — these can be offline or online (e.g. Facebook groups, Instagram via hashtags, online discussion forums). You can either chat with them via private messages or even ask if they are open to give feedback on your idea via a call. This method has worked exceptionally well for us in the past!
Don’t ask them directly how they like your idea. Nobody will ever tell you straight up that your idea sucks. People don’t want to hurt your feelings, but you need to know their honest opinion.
Instead, ask them about their pain points, how they have tried to solve them before, what worked and didn’t work and why. Ask repeatedly Why and dig deep until you understand what their underlying motivations and needs are.
Talk to as many people until your insights will start to repeat themselves. That’s when you know that you have built a solid knowledge base. Typically, 10 interviews are a good number for your initial market validation.
Join conversations of your target audience online
It’s never been easier to connect with people around the world than nowadays! There are a couple of platforms we suggest for getting first hand insights from your target group.
We love going through the discussion threads on Quora and Reddit because you can learn so much in the shortest amount of time. Simply join discussions that are related to your idea or scroll through answers to questions that are relevant to your business idea. You can also publish any questions you have and collect responses from your target customers.
Another great way to find your target audience is through Instagramor Facebook. Think about what your target customer is looking for or talking about and search for them by using hashtags. Read their posts, engage through thoughtful comments, or do a research of what your competitors are posting about.
Our third suggestion is to use Answerthepublic to find out which questions your target audience has. It’s not exactly social media but it’’s a great tool to learn what people are googling for in your field.
Conduct a survey
While face to face conversations give you a great depth of information, surveys help you to quantify your insights. We like to use surveys to understand how common the problem is that we are addressing and if what we have learnt from 10 people is valid for 100 or 1000 people.
There are great free survey tools available. We mostly use Google Forms because it provides all basic functionalities and is easy to analyze with Google Sheets.
Do a landing page test
Once you have a good understanding about the pain points and needs of your target audience, a landing page test is a great way to measure how many of your target personas are likely to convert into actually opening up their wallets and paying you for your business idea. This is part of your quantitative market validation.
What you need to do if you want to test your idea and pricing via a landing page test is to set up a simple landing page that clearly describes your offering and pricing. To measure whether your idea is a good business idea, you will measure the conversion ratio of subscribers versus total website visitors. A great conversion rate depends on your niche and business model, but 3% is typically a good result. According to WordStream, the top 25% of landing pages convert at over 5%.
There are many free landing page tools available that you don’t even need to purchase a domain for. You can drive traffic to your landing page through free Pinterest marketing, ask for feedback in Facebook groups, or posting it on Quora, Reddit, and Instagram.
Remember, your offering and uniqueness should be easy to grasp by the website visitor. That’s why it’s a good idea to test your landing page with friends before you launch it.
Day 4. Do a back of the envelope business case
The last step for evaluating whether your idea is a good business to start is to create a back of the envelope business case. Your goals is to come up with a rough estimate of your revenue potential and expected profit.
How do you do that? The easiest way is to start by calculating your profit per customer. What is your revenue compared to the cost of delivering your product or service? What are your customer acquisition cost? Subtract the cost from the revenue per customer and you’ll get your profit per customer.
After that, think about how many customers you will need to acquire monthly in order to make your monthly profit target. How does that number of customers feel? If you’re not convinced yet, you might need to tweak your pricing or business model until you feel comfortable.
Day 4+. Every good business idea needs a customer base
Starting your own business is a great way to create more flexibility, purpose, and freedom in your life. In this post we shared how you can do a first test if your idea is a good business idea through market validation in only 4 days and without spending any money.
Once you have evaluated whether your idea is a good business idea to start and received a green light, it’s time to bring your business idea to life! Here’s the most important reminder: Even if you’re working hard behind-the-scenes, without customers, your idea is not a business but an expensive hobby.
You need to start connecting with your ideal client base and promote your good business idea. Don’t worry, you don’t need to have everything figured out yet to start building an audience of fans. The motto is: Connect now, pitch later! Build casual authentic connections with people you would want to work with. Ask them about their goals and challenges, tell them about yourself, and keep in updated about how your business idea is coming along. People love real people over perfection!
It’s your turn: Take your business idea to the next level!
The fact that you made it to the end of this post shows that you have the dedication to turn a good business idea into a profitable online business. We are so excited for you to get started online and create a business that gives you purpose and freedom!
Imagine the amazing ways to earn a full-time online income with your an idea your passionate about. Imagine it will allow you to leave your 9-to-5 job and work from anywhere with a wifi connection!
Here’s the thing: You will never know if you’re going to be successful until you actually try.
The main mission of our brand is to help people start a successful online business and land their first clients.That’s why we created a Free 5-Steps training that walks you step-by-step through discovering your unique superpower and turning it into a premium priced online service… without waiting for more confidence or followers. You already have everything you need to do it! Start your successful online service business here.
