How to Validate a Business Idea While You’re in College Alumni guest post by Ryan Robinson '12
February 21, 2017
During the month of December 2016, I embarked on a 30-day challenge to validate a business idea without using my existing audience or current business at all. I asked my readers to tell me what idea I should validate and limited myself to spending less than $500 to make it happen. Then, I documented it in real-time throughout the month.
The challenge was a success. In just a few short weeks, I pre-sold 12 copies of a book (that didn’t even exist yet), generated $108 in revenue without a website and built an email list of 565 subscribers who wanted to learn more about my upcoming book. I even had time to take a week-long vacation and visit my family for the holidays.
Today, I’m breaking down all of the major strategies I used, so that you too can start validating a business concept with real, paying customers this month—regardless of how much time you’re spending in class, doing homework, at an internship or working a part-time job.
1. Find a Profitable Niche (That You Care About).
Business ideas don’t just fall down out of the sky. While you can find a lot of inspiration on the types of businesses you should consider starting, you shouldn’t pursue a random opportunity just because someone told you it’s a good idea.
In a study conducted by CB Insights, researchers found that a whopping 22% of failed startup founders cite their primary reason for failure as either never having a true interest in what they were building or losing focus on the goal they set out to achieve.
Put simply, they were never really interested in their business concept. In my experience, and that of 55 other top entrepreneurs I interviewed, the best business ideas come from your strongest areas of interest. Beyond just that, choosing to work on your idea as a side project to your course load, internship and other commitments will have unexpected benefits like building exciting new relationships, making yourself a more attractive job candidate and an increase in motivation.
When the going gets rough (it will), you need to be motivated beyond just the lure of dollar signs. If you’re only in it for the money, you’ll either give up or be quickly pushed out of the market by people who genuinely care about what they’re doing and the people they’re helping—they’ll be more motivated than you.
If you’re not sure what your interests are, or which of them may potentially lead to a profitable business opportunity, start by answering these questions:
- What are your hobbies?
- What is the most meaningful part of your day?
- What are some topics you could enjoy writing a 1,000 word article about?
- What do you love doing?
- What is an achievement that’d make you feel particularly proud of yourself?
- Are there any specific aspects or functions that you love about your job?
- How about any childhood dreams you still find intriguing?
- If you had to choose just 1 thing to be remembered by, what would it be?
If you want more questions and guidance around uncovering profitable niche ideas, there’s an entire lesson & worksheet dedicated to this topic in my new course, 30 Days to Validate.
2. Leverage Your Skills and Outsource Your Weaknesses.
If you want to become successful as an entrepreneur, you need to be great at what you do—and you must focus on giving yourself as much time as possible to leverage those abilities. Here’s why.
It’s proven that discovering your strengths and focusing on using them makes you more confident in your work. It also helps you unlock more creative solutions to the problems you encounter, because you’re more comfortable and in your element.
On top of that, studies have also found that those who engage their strengths on a daily basis report higher levels of positivity, which helps create a buffer against the negative effects of stress, fatigue and trauma.
When you choose to leverage your strengths within your business, you’re maximizing your opportunity for success by setting yourself up to be more confident, creative, positive and less prone to becoming overly stressed.
When it comes to validating an idea, fast and simple is the name of the game. If you’re not sure what your most marketable skills are, I have a free skill assessment guide that’ll walk you through the process of discovering your skills.
Focusing on leveraging my strongest skills for this challenge translated directly as a clear sign that I wouldn’t be investing time in any of these areas, outside of my current expertise:
- Not going to build a website
- Not going to design any fancy visual content
- Not going to create an app
- Not going to make a physical product
- Not attempting anything else far outside of my current skill set
That left me with having to lean primarily upon my skill of writing to validate this idea—which is a skill set I built largely during my time at Chapman. I didn’t have time to go out and learn new skills, take classes or meet with coaches for weeks or months.
Delaying this in any way because I felt I didn’t have the right skills would’ve been nothing but an excuse. You may need to learn new skills or bring in complementary partners like fellow co-workers or classmates, in order to fully build your product or service eventually, but not to simply validate the idea.
3. Create an Early Feedback Group.
The goal of creating an early feedback group of people who are within your target market, is to make sure that you’re building something they’ll actually need—and want bad enough to pay for.
But, before I could start telling people about my idea and asking them to join my feedback group, I had to at least have a rough idea of what I was pitching them—a guess about the main problem I was seeking to address.
That led me to first crafting a quick elevator pitch based around the gaps I found in the marketplace by researching my competitors and identifying my own frustrations about existing solutions. If you want to learn how to craft an elevator pitch in 20 minutes, I cover it in full detail in my original post right here.
Once you’re ready to start reaching out, begin closest to home. Keep in mind that you don’t necessarily want your mother and father to be in your early feedback group unless they’re actually a realistic potential customer.
Before I started my outreach for my challenge, I did my best to quickly make sure the friends I wanted to ask would be within my target so I wouldn’t waste time presenting an idea they’re not interested in.
After texting, emailing and messaging friends, guys from my Fraternity, former classmates and acquaintances for just 1 week, I had netted 47 email subscribers for my early feedback group.
You can start building your feedback group right now by working your way down this list:
- Friends & family
- Fellow Fraternity or Sorority members
- Former co-workers
- Teachers or professors
- Fellow members in clubs, societies, groups or meetup networks you’re in
Scroll through your recent text messages. Browse through your last couple hundred personal emails. Head into your Facebook friend list, LinkedIn connection list and check out your Twitter followers.
Look for people you know, who you think may have an interest in what you’re building. Then, out of the people who express interest in your idea, ask them if there’s anyone else they know who comes to mind—that might be excited about what you’re building.
4. Have One-on-One Conversations With Your Target Market.
Once you’ve started to build your small community, you need to keep the conversation going with them. At this stage however, your goal now shifts to focusing more on determining the right mix of highlights, features and value propositions that’ll be most appealing to your target audience.
During my challenge, a few conversations with my early feedback members naturally transitioned into brainstorming sessions in which my audience started telling me what they wanted. This is one of the biggest benefits of involving your community in the process of building your solution—when they’re engaged, they’ll tell you exactly what they need. This is covered frequently in just about all of the best business books today.
Do everything you can to foster this type of idea flow in your conversations. If you listen hard enough, for long enough to your audience, they’re going to tell you exactly what they want. While you can have these conversations over text, email, Slack or another digital media, nothing beats meeting up in-person for a quick coffee or picking up the phone for 15 minutes to get more meaningful feedback from your target audience.
Here are a few of the top questions you should be asking your target market, with the goal of learning more about their motivations and needs as it pertains to your business idea:
- What are you most looking to achieve (as it pertains to your topic area)?
- What are some of the current solutions you’re using, or have used in the past?
- What frustrates you most about current solutions out there?
- What features would you most like to see (as it pertains to your topic area)?
- Do you have any fears (as it pertains to your topic area) holding you back?
- Would you be willing to pay for a solution that does XYZ for you?
5. Develop a Competitive Advantage.
By this stage of validating your idea, you’ve had a number of meaningful conversations with your target audience and you’ve built a small list of people who are interested in getting updates on your upcoming solution.
Now it’s time to expand on your original elevator pitch and pull some more insights out of the feedback you’ve been gathering from your conversations with the people in your community. All with the purpose of developing a competitive advantage that’ll make your upcoming solution uniquely valuable to your audience.
A competitive advantage is defined as your unique advantage that allows you as a business to generate greater sales or margins, and/or acquire & retain more customers than competitors. In short, it’s what makes your business, your business.
Your competitive advantage can come in many different forms, including:
- Your cost structure
- Product offering
- Distribution network
- Customer support
- Your own personal skill set
- Your experience
- Industry knowledge
- Strategic relationships
- A powerful personal brand
- Large and engaged audience you’ve built
The strength of your competitive advantage will greatly affect your early results in validating your idea.
To land on the strongest competitive advantage(s) for your idea, start by learning from your competitors and seeing how you can improve upon their shortcomings. Then, carefully comb through all of the feedback emails, conversation notes and ideas you’ve recorded from your target audience conversations so far. Look for commonalities, trends, surprising insights and particularly interesting ideas that catch your eye. Highlight them as potential value propositions to come back to for developing your competitive advantage.
6. Grow Your Email List.
Despite what many profess, growing your email list further is actually an optional step in the process of validating an idea. If you’ve already manually built an email list of 100 or so subscribers, you likely already have enough people to validate your idea with.
I’ve written about a lot of list building tactics that have worked well for me over the years, but here are a few of my favorites for quickly growing your email list beyond the limitations of manual outreach.
While guest posting is significantly more effective in the long run once you have a live website or blog of your own already, it’s not necessary in the context of validating your idea quickly.
Make sure you’ve first optimized your LinkedIn profile to look relevant to the people and websites you’ll be reaching out to for guest posts. Then, all you need is a very basic “landing page” that gives you the opportunity to capture the name and email address of any readers who are interested in learning more about what you’re planning on building—based on a brief description written on your landing page. This landing page will be a foundation for the proof of concept you’ll be building in the next step anyway.
Within your guest post that’s topically relevant to what you’re planning on creating, you’ll tastefully link back to your landing page so that readers can click through to learn more and sign up for updates.
If you have a budget of $50 – $200 for testing paid traffic, Facebook Ads are going to be your biggest bang for the buck, by far. With that budget range, you can generally drive a couple hundred extremely targeted visitors to your landing page and see how they react to your proof of concept.
I’ve used Facebook Ads to validate a new business concept in the past by spending around $100 on Facebook Ads for a week to generate leads, which led to phone conversations and making a $5,000 sale. This guide from AdEspresso will get you started quickly on using Facebook Ads without breaking the bank.
In my experience, giveaways are a mixed bag. Sometimes they work very well and give you a ton of qualified leads, but other times you’re left with a list of people who signed up solely to win something cool.
My advice is to keep your giveaway item as closely related to your upcoming solution as possible (and keep your costs as low as possible). Spending meaningful amounts of money before you have a clear path to making it back is dangerous.
However, giveaway are a potentially viral marketing tactic that’s worked well for me in the past. I used one during my challenge generated 565 email subscribers in just 6 days thanks to the built-in viral sharing that the KingSumo Giveaways plugin has.
7. Build a Proof of Concept.
Now you have a small audience and you know the specific offering you want to validate your idea with.
However, instead of pausing here to invest weeks or months into building your course, writing your book, developing an app or creating a complex website to highlight your freelance skills, we still want to make sure there’s a paying demand for what you plan on building—before you actually go out and build it.
That’s where building a simple proof of concept comes into play. A proof of concept is a realization of your method or idea that demonstrates its feasibility.
Well-executed proof of concepts are designed to achieve these 3 things:
- Verify that your solution solves the problem you’re attempting to address.
- Confirm that your solution is valued by your future customers.
- Determine whether or not people will pay for your solution.
Once you have a more clear picture of what your specific product or service offering is going to be, it’s time to set a goal for what you want your proof of concept to achieve.
There’s no definitive, across the board success metric for all proof of concepts, but I always recommend setting a proof of concept goal of generating a specific amount of revenue from a predefined number of paying customers.
Here are a few popular examples of proof of concept goals:
- 10 pre-orders for your upcoming product or service
- $100 in affiliate commissions generated
- 100 listeners on your first podcast episode
- Getting a book proposal accepted by a publisher
- 100 waiting list subscribers
- Fully funding a Kickstarter campaign
With my challenge I set my proof of concept goal at 10 pre-orders of the book I wanted to create. If I could get 10 people to pay me for a book that doesn’t yet exist, that’d give me enough confidence to go out and actually create it.
Now that I had the goal I wanted to achieve—10 book pre-sales, it was time to create a (simple) preview of what that would be, so I could start pitching it and asking my subscribers to buy.
Here are a few examples of the many different forms a proof of concepts can come in:
- Google Doc
- Blog post (like the one I wrote to validate my first course idea)
- Explainer video
- Portfolio of your existing work (like this free one by Contently)
- Hand-built prototype (like my iStash prototypes)
- Simple product sales page or website
- Rough demonstration of your software solution
- Email or email newsletter (like how ProductHunt started)
- Self-published book
- Facebook or Slack group (like #Investing, a group created by a reader of mine)
Going back to leveraging my core skills as a content marketing consultant and writer, I took a couple of hours and wrote out a simple Google Doc that was just a few pages long, to serve as my proof of concept for my book idea.
I kept the proof of concept very simple (721 words) while focusing on how it would benefit readers. Now it was time to see how it performed with my subscribers.
8. Launch and Get Pre-Orders From Your Email List.
You’ll need a secure way to accept payments from your subscribers before asking them to buy. That could be as simple as asking them to PayPal you the dollar amount, using a free card reader from Square to accept CC payment or setting up a simple product page on a platform like Gumroad.
Next, you’ll need to choose a realistic price point for your offering—a price point that
helps you achieve your proof of concept goal. Don’t worry about the dollar amount you earn from pre-sales of your solution at this stage, since your goal at this stage is to validate your idea—not make thousands from it this week.
This is something that so many aspiring entrepreneurs neglect to see the importance of, which often leads to failure, loss of motivation and disinterest in an otherwise great idea that you asked too much for (before actually building it).
To price the pre-sale of my book, I took a look around to see what others were charging for similar books so I could price myself in the same ballpark. Next, it was time to start pre-selling.
Your first sales need to come from manual, individual conversations with your subscribers. You can’t mass email a link to your proof of concept or sales page and expect people to immediately buy, or even understand the value in buying.
Start calling, texting and emailing your most engaged feedback subscribers. Ask for their opinion and gather their feedback on your proof of concept.
By the end of my challenge, I was sitting at 12 pre-sales totaling $108 in revenue, thus achieving my validation goal of 10 or more pre-sales for my book. Could I have made several hundred more over the next few days by keeping the conversations going? Probably, but I already achieved my validation goal so I wanted to move forward.
So, what comes next for you? If you’d like to validate your idea in the next 30 days, I’d love to help you make it happen. Just shoot me an email at email@example.com and I’m more than happy to connect.