Validating your startup idea, is a process that you want to complete in the shortest-possible time. The longer it takes, the harder it is to keep yourself and your team motivated. It also gets harder for you to make it to the next phase.
Here are a few tips to help you validate your startup idea efficiently:
Define your idea in terms of one problem for one person: It is much harder to validate a concept or idea aimed at multiple demographic groups and multiple issues. Targeting one type of customer clarifies who to approach first and what to look for.
Learn about the problem and existing solutions as much as possible: Once you have identified your target customer, start interviewing people who fit the profile, but focus on learning more about the problem and existing solutions. Don’t talk yet about your own idea, product, or solution. Ask when they have experienced the problem, what actions they took, and whether there is an existing solution.
Recalculate and re-plan: As you learn more about your users or as you launch your beta product, you will start gaining more insights. Every time you acquire new facts about your market and users, or new metrics from your beta product, recalculate and re-plan. Make sure your market is big, and your business model is sustainable.
Aim to reach $100 million revenue in three to five years: It is important that your business demonstrates healthy growth and reaches a good size, especially if you plan to raise capital from venture capitalists.
Plan to grow for 20 years: You want to be in a market where you can see growth for at least another 20 years. The larger your vision, the longer it will take to achieve it.
Pay close attention to user retention: After you launch your product, pay close attention to frequency and repeat usage, the two most important factors in validating your business model. When these are higher, you can get away with low AOV (average over value); but if they are lower, you will need to have high margins and/or high AOV.
Ask yourself three important questions when validating your startup idea: Will people use my product? Is there a big-enough market? Is the business model sustainable? The tips presented above can help you identify your answers efficiently. You want a resounding “Yes” in response to all three.