How to validate any business idea

Idea validation strategy

Rimjhim Jain , 24 November, 2020

Idea validation of any business idea is the key to any successful business. So many people/businesses have ideas but a very few of them achieve success. Why is it so?

There can be many reasons for failure of any business but the biggest reason is lack of market need. So, if no one wants your product or service, you can not have a business. Idea validation helps to dive deep into market needs. So it's a good idea to invest some time to validate the idea.

Here we are sharing some piece of information that may help you validate your idea. This is what we apply in our products. All points may not fit in your business but some of them will definitely help.

What problem are you solving?

It's very important that your idea solves some sort of real problem. Not only that, but Is the problem worth solving? So before going further, do some detailed study about the goal behind your idea and its future. Otherwise it would be difficult to find potential customers who can pay you for using your service/product.

Example of a failed startup -
Doormint - It was an On-demand laundry startup. But despite several tweaks to its business model, it was unable to scale up without an unsustainable cash burn. “The costs of processing clothes, pick up and drop logistics, and packaging were difficult to recover through prices,” Doormint co-founders Abhinav Agarwal and Naman Lahoty said in a goodbye statement.

One factor that neither the founders nor investors seem to have taken into account is the widespread use of low-cost house help in India. Every neighborhood also has a dhobi (laundry person). An online laundry service has to beat that in convenience and cost. That’s a big ask.

Example of a successful startup -

Ola Cabs - It has emerged to be the most prominent Indian mobility service provider in the country that offers its services across 50 cities in India and is evenly spread across countries, including the UK, Australia, and New Zealand.

The idea of Ola, a cab aggregation startup, came from its founder’s terrible experience. At the same time, he was traveling from Bengaluru to Bandipur, where the driver of his cab stranded him in the middle of nowhere over a failed negotiation deal.

So let's have a look at the difference between models of these two examples and what makes the OLA model successful in comparison with Doormint.

Doormint couldn’t beat the convenience of existing local services provided by local dhobis, maids and dry cleaners , cost and consistency to ensure customer satisfaction. And that was totally the opposite in the case of the OLA model. All the cost, convenience and customer satisfaction couldn’t be beaten by any of the existing services.

Who will be your target customers?

For a successful business, target customers are equally important as a solution to some real life problem.

You should identify the segment of users who will become your target customers. And it's very important to check if they are willing to pay.

Example -

  • Advertising the latest video games in AARP’s magazine(Magazine for retired People) is an obvious example of advertising in the wrong market and one that makes an effective point about the importance of using age demographics to guide your advertising.
  • In another example, in some societies people pay for convenience while others pay for status. If you charge for convenience in status society you are wrongly placed.

Who are your competitors?

You should do a thorough research to find out your competitors. Is there a solution already? Are they successful? Identify pain points and check how is your solution better? It’s okay to have competitors in the market. From there, you would know what the expectations are for a solution like this and how to add improvements in your own application.

What will be your USPs?

There should be some USPs(unique selling points) in your idea to attract customers and stand with your competitors. Even a small change in execution can give you different heights.
E.g. Many eCommerce Marketplaces existed in India between 1999 to 2007. None of them succeeded, but when flipkart emerged with Cash-On-Delivery (COD) payment method the game changed and everyone in india embraced online shopping.

Start with a MVP

Before building a full version of any product idea, you should make a MVP (Minimum Viable Product). MVP is the smallest thing you can make to start the validation of the product. Build it as small as possible to save time and efforts. You can also use any existing tool if that can help you build MVP for your business idea.

It is very important to decide what to include in your MVP as this is the stage where you will decide whether to continue with your idea or drop it. Also collect reactions of your MVP from potential customers and consider it in full version to make a better product.

Revenue Plan

To run a successful business it's very important to have a revenue model. Everyone wants a free product but to run a business you need to charge your customers for using your product/service. While finalizing the price for your product, keep in mind that you should not over and under charge your customers to stay in the market with competitors. Also check what your competitors are charging and split the charges for using your USPs to clearly highlight how you are better than others.

Customer Acquisition

Even if you have the best business idea, your business is nothing without customers. So getting customers to use your application is the most important point you should work upon. Have a thoughtful customer acquisition plan and marketing strategy to attract your targeted customers. Your plan should not only consider the first customer but also the n-th customer.

Retaining customers

Acquiring new customers is great, but retaining existing customers should be your primary focus. You will be losing a lot of money If you’re unable to retain your customers. Current customers cannot be ignored or else they may be won over by your competition. So you should plan customer retention strategies carefully.
For example - You can try
  • Giving them the best customer support
  • Sending engaging emails to customers
  • Offering a discount or credit to return
  • Don’t over-promise

Improving the product

Do some research on emerging markets that may have a need for your application. In order to penetrate more profitable markets, you must remain open to change or improvement.

While it may be tempting to do anything to increase sales, first, take the time to survey your customers. For example, developing a customer satisfaction survey or a consumer product survey can generate information about what is important to your customers, and gather their opinions and feedback.


By starting much smaller than you might have originally thought can help you figure out if you have a good business idea. It also means that you don’t sit behind your desk building a business plan without getting out and actually talking to your customers.

Once validated through the steps above, it is much easier to proceed to the next steps.
So from now onwards just start with the fundamentals of a plan and then verify that your idea is good before moving on to the next step.

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