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How to validate your business idea in 5 steps

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Startups are unique. Even the ones with similar business models are often different in their execution and areas of focus. However, there is a shared pattern that you can observe in most successful ventures that have scaled. They all have unique products that a lot of people want.

On ‘Customer Development Methodology‘, Steve Blank identified five of these. (1) ability to create value for customers, (2) ability to solve a significant problem for which someone is willing to pay a premium, (3) be a good fit with the founders at the time (4) able to scale to more than $100 million valuation and (5) promise attractive returns for investors.

The most important characteristic shown by successful companies is the ability to create a product with differentiated value for its customers.

The path to value creation often requires series of questions; how are we making people’s lives better? Whose lives are we trying to make better? How many are they? Where and how can they be found?

Unbundling these questions is the core of customer discovery process.

Customers keep you alive

The reality is, if you develop a product that a significant number of people are willing to pay repeatedly for, you will never go out business. Good design for a good idea is noble. But good design, good idea and paying customers is the stuff of unicorns.

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Excellent products, with great designs, have failed while some products with mediocre designs have perpetuated. Users don’t pay for aesthetics; they pay to get their problems solved. Startup graveyard is full of well-designed product that failed such as Color.

Customer discovery is a big deal. Focusing on customers from day zero will help you build a better product. More important; it’ll enable you to validate your idea before gobs of money go into writing code that may end up being junked.

So here are five tips that will help your customer discovery process.

1. Get out of the building

Facts don’t reside in the office, opinions do. Opinions differ, they are often wrong and can pound a startup to death. You need to round up the views from inside the building, draw hypotheses, then get on the streets to meet likely customers. Explore your networks. Go to industry events. Make cold calls. Do whatever you can to have direct contact with those who are likely to buy from you.

2. Listen, don’t sell

A big part of selling is listening. The best salespeople in the world have been known to say little while asking pointed questions that’ll lead customers to understand their problems and ask what the product can do to help. It’s the art of consultative marketing.

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The goal is to understand your customer archetype. Don’t just listen, do everything you can not sell straightaway. This will allow you to absorb responses from your customer without interrupting with your idea.

3 Test your assumptions with questions.

At this stage, you are finding the problem-solution fit. Try figuring out if you have the best solution to an identified problem.

Ask questions that help you determine the right solution to the problem without giving too much away. The questions you’ll ask may include:

  • What are the current pain points of your target users?
  • How are they currently solving them?
  • Will they pay to see these pain points go away?
  • What is their opinion on the best way to solve it?
  • What does it look like without that solution?
  • What will it look like with the solution?

4 Have a flexible plan

There needs to be a working plan crafted to take on the problem. But the plan shouldn’t be written in stone. It has to be iterative based on customer’s feedback. It’s likely they have a different idea as to how they think the problem should be solved. You don’t want to take their word as the gospel, but you don’t want to ignore it either.

Iterate your execution based on insight from your users.

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5 Develop for the few

The most common temptation for a lot of entrepreneurs is to cram all the features into the first product release. Doing this is costly and counterproductive.

At best, the first version of your product is still an assumption of what the solution looks like. It should solve the most pressing problem that will make few early adopters try it out.

These people understand the problem, but may not necessarily agree with you. They know what you are building. These people are the ones that can get excited about your product and share it with others. The goal is to create for these people, then scale.

After customer discovery, implement your solution, verify the answer and if it checks out, maintain it.

Whereas customer discovery process should begin before product development, it could still be done at other stages of your business. If you’ve started designing but don’t already have a product ready, go out and discover potential customers before building. If you have only a few customers, ask for feedback then iterate. If sales are dipping after months of consistent growth, sit with existing users, discover what they love about your product, then double down on it.

The plan is to be constantly in beta.