SBX 21: How To Validate Your Business Idea


Has anyone ever told you, “you’re so great at (insert skill), you should start a business!”

These words, though innocent, have paved the road to more failed business ventures than any recession, depression or economic downturn ever has.

Encouragement from friends and family is great, but before you start a business, you have to dive a lot deeper than that if you want to know if your great idea has a chance at business success.

Most of us business owners fall in love with our business ideas.  You get an idea, fall in love with it and go and start a business.  You assume everyone will have the same excitement for your business idea as you do.  You’re wrong.

Everyone is different and everyone has different tastes.  That’s why some people drive a Mercedes and some people ride a scooter, we all have different tastes and are motivated by different things (I would love to zip around on a scooter, but no interest in driving a Mercedes).  That’s why taking the time to test and validate your business idea before you spend your life savings is so important.

For a few hundred dollars and a few dozen hours of your time, you can get a pretty good idea of what people think about your idea and if it’s something worth pursuing.  So why do most people ignore this step?  I think first, because they aren’t sure exactly how to test their idea properly, and secondly, they are in love with their idea and are afraid to expose it to criticism.  Big mistake.

Before you go all in, bet the farm and jump in with both feet, take some time to make sure there is interest in what you think the world will fall in love with.

Listen and Learn…

  • How dreaming is great, but not testing is bad.  Very bad
  • How to find the right audience to test your idea with
  • How to get people to take action in validating your business idea
  • How to leverage technology and existing resources to test your idea
  • What actions people need to take in order to get true validation
  • Why crafting the right offer is so important when validating your idea
  • How to get people excited about your idea

Action Steps from this episode:

  1. Assemble you audience. Before you start any kind of testing you want to be sure that you are testing your ideas with the type of person that will be your customer. It’s a big waste of time if you try and pitch your idea to a demographic that isn’t interested. Spend the time doing your research so you have a pretty clear idea of who will want to buy your product or service

  2. Decide how you are going to pre-sell your idea. Are you going to ask ask people to sign up for an email list, make some sort of pre-order action or maybe fill out a contact form for more information. Decide what the mechanism is going to be to validate your idea.

  3. So you have the audience, the plan, now you have to craft the offer and call to action to actually get people to take the action you want. Your offer has to be interesting and there has to be a clear call to action or else it’s unlikely they will take any. Here is where you will be able to get the data to see if your idea has legs

Links and Resources:

  1. The story Mike told about a local bar that pre-sold beer mugs (that came with a lot of free beer!) in exchange for helping to fund the construction of the bar.

  2. We spoke about this company in the podcast that can provide targeted survey participants to test out your idea.

  3. I think we forgot to mention this in the podcast, but Google has a great and cost effective consumer survey tool you can run on your website

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9 replies
  1. Rebecca Gibbs
    Rebecca Gibbs says:

    You guys are the best. And thanks for the shout out!

    This topic really hit home for me since it has been a topic Mike has really encouraged me to pursue. Some of the things I’ve been working on the last few weeks have been determining my audience, and designing packages to pre-sell based on the target audience.

    It really goes hand-in-hand with marketing. Like you guys said, the idea needs to be pitched to the demographics needing to be reached. I think this is also, not only a great way to validate a business, but also to validate a marketing plan! You’ll have to know how to reach your audience when you are open for business, so this is a great time to figure out how to reach them.

    One last note. While it is important not to get too carried away with this, I think it can help (for some business ideas) to design multiple pre-selling packages. I think this is beneficial to businesses that have different targeted audiences for different aspects of their business.

    My bakery, for example. There will be a store front, so creating a package similar to what the brewery did is a great idea for bakery treats. Weddings & special events may have another package because that is a different target market but is still a very important one. And the final will be reaching out to the online community for my future e-store.

    We like 3’s, right? So there are my 3 different ways to validate the 3 most important aspects of my bakery.

    There are a million other ideas I could come up with for other aspects of my business, but narrowing it down to 3 keeps it simple enough for me to create a package/plan for each. Plus, if I decide to run with each one, it’ll bring my bakery in front of my main target markets before I even open!

  2. theinvisibleboss
    theinvisibleboss says:

    Rebecca… haven’t you heard the old saying: “if you don’t have something nice to say, then don’t say anything at all??” (lol lol lol) <—- wow, I'm 16 again. #AmusingSelf

    Love the idea of multiple pre-sell packages. The hardest thing, in my mind, is making a big push for each one. My experience in pre-sell is that it's better to nail one at the beginning, get going, then introduce a second at a later time. Of course I'm guessing this is what you had in mind when you wrote this. Maybe I'm talking to myself… as the kind of guy who wants to give everybody that perfectly targeted custom experience, which is impractical when you're just starting out. Hmph!

    • Rebecca Gibbs
      Rebecca Gibbs says:

      Talking to yourself is just a sign of being genius. Or at least that’s what I tell myself…

      And yes, I agree it is best to start with one before moving to the other. With mine I am hoping to launch them fairly close to each other, but only if I can recruit good help from friends and family. If I’m on my own, then I’ll have to work on them one at a time so I am not overwhelmed (Episode #12!!! HA, I can put a plug in for past episodes just like you guys!)

        • Rebecca Gibbs
          Rebecca Gibbs says:

          Being my army of foot soldiers to help me take over the world! Oh, wait…..wrong subject.

          Ok, so for the fundraising/reselling. For the idea that is similar to the brewery, I will run ads. However, I also want to do more than that. Plus, I’ll have 2 different packages. 1 is geared towards an individual, the other towards a business.

          Ways my “soldiers” can help:
          1. hanging up/passing out fliers.
          2. Meeting with business owners/managers to pitch my business package.
          3. Helping with phone calls, and scheduling meetings (I will only have 1 or 2 people designated to this task that calls will be forwarded to and I’ll create an online calendar for them to have access to for scheduling).
          4. Taking advantage of networks, whether online or local. So those active on social media or have their own site/blog, can use those to spread the word about the package(s). Those that have a large network offline can spread the word in person.

          That’s all I have so far for the help they can offer with the funding.

          I will say, if a person uses friends and family for help, they better be willing to reward them. My little brother always comes to help me around the house or with projects that I need a guys strength for…..As much as I love him, and as much as he wants to help, I can’t abuse that relationship. So I bribe….I mean reward him, with food. 🙂 He’ll do anything for food, especially if I send the leftovers home with him.

          Rewards need to be worthwhile for the person you’ve asked to help.

          For me, I will likely have the reward be one, or a little mix of the following:

          1. pre-opening party for my helpers. (they’ll get food, plus door prizes for discounts, coupons for free treats, and gift certificates).
          2. If they reach a certain # of packages sold, they’ll earn the same package for themselves.
          3. They get a small % or set $ amount for every package (or specific number of packages) sold. The dollar amount will either be cash, or gift certificates to the bakery.
          4. Promotional material like hats, shirts, aprons…something fun with my logo on it!

          *Side note, notice how each one benefits the helper but can also turn back around and help my business?! Example, I give someone a $20 gift certificate, they may come in and order $25+ on an order of treats for a dinner they are going to. Or if they get a shirt, they get something to wear, and I get a walking billboard.

          So, still deciding on the reward. I’ll probably wait until I have finished planning the details/cost/profit of the packages, PLUS who I decide to ask for help. If the majority of the people I pick would be just as happy for the party, then I’ll do that. If they are more motivated by a long-term reward, like earning a package that gets them free treats for a year, then it’ll be that.

          You have to know your helpers just like you have to know your customers. If you treat your helpers right, even when you are done with their help, they will still help you by recommending you to all their friends. (Kind of like what Josh says in the next episode, only he referred to treating your customer right and they become your word of mouth!)

          Outside of fundraising, they are also helping me with the painting, cleaning, and any light construction type work that the city isn’t requiring a licensed contractor to do.


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  1. […] you’re an online or offline business, seasoned veteran or wannabe start-up, sooner or later every USP (unique selling proposition – the thing that makes you different) […]

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