Business Idea Validation – What, How, and When to formalize your Business Idea?

Business Idea Validation – What, How, and When to formalize your Business Idea?

Ordinarily, ideas are always generated in an entrepreneurial mind. However, despite the moment of euphoria that these moments generate, one never knows if the idea will have a future or not. There are cases where the entrepreneur has gotten a bad idea ahead. At the same time, he can give up a good idea and ends up putting it in the drawer. Thus, it is essential to understand the steps to formalize your business idea before moving to the next steps of hustling, hiring, and selling your products or services.

Well, know that there are ways to prove that the idea is good or not and avoid any wastage of time/money. Therefore, we will present in this post the concept and tips to validate the business idea. Keep reading!

What Is Meant By Validation Of Business Idea?

Business Idea Validation is nothing more than testing and understanding if it can become a profitable product. The main goal of idea validation is to expose your potential tech product to end users and observe the user response after the launch.

Business idea validation includes anything from information-gathering interviews to special end user interfaces on the web or mobiles. The best-recommended ways of validating business ideas are face-to-face, in-person, or virtual video calls.

Why Do You Need To Validate Business Ideas?

In short, the main aim behind validating business ideas is to save you a ton of time and money. Moreover, it drives you deeper into the whole idea and generates interest in your business idea. Hence, testing your idea revolves around exposing it to the marketplace at the end.

You have also avoided silly mistakes like working on an idea that no one is really interested in. Here, idea validation benefits you a lot to find out whether your idea appeals to a potential audience or not. Therefore, validation of business ideas, especially in the case of mobile app development or developing some other tech product, is essential to tell you whether you should pay to create a thing or not.

Business Idea Validation Process

About 8% of the startup business ideas face failure because they burn out before they become fruitful. So, here are some basic steps that will help you stick through an idea validation process.

  • Be critical: During an idea validation process, it is essential to stay inspired and enthusiastic. Plus, you shouldn’t ignore the truth that even a good idea has lots of bad options.
  • Be simple: Hypotheses of your business idea should be concerned just in a particular way. So, you need to set up metrics and track them to avoid unnecessary actions.
  • Be systematic: You need to be disciplined about the idea to make sure your idea will work in the long run in real-life situations.
  • Pay attention to mistakes: In this process, you will be learning and improving continuously. You can ask other entrepreneurs about the mistakes they commit in their early stages.

Tips For Validating A Business Idea

Now that you already understand more about the importance of the business idea validation process let us provide some tips for doing this in the best possible way. Check it:

1. Check If You’re Revamping the Wheel

You might be sure that your proposed idea is the best, but there are chances that a similar app already exists. So, it requires you to jump into a deep search to see if similar apps are already available, then what unique features you can add to make it stand out. Suppose you find out the same idea already exists after a long search, don’t worry at all. Initially, you can use your idea to make a start and launch the app at least. Then once after launch, based on feedback and reviews of users, you have to find ways to improve the idea. So, if you are confident that improving your app idea can attract more users than your competitors, you are ready to move to the next step.

2. Three Pronged Analysis Before Launch

According to Statistic, approximately 66% of business idea initiators will always have a back plan. So, for planning your backup plan, here are a three-pronged analysis:

  • Investment Cost
  • Personal Interest
  • Potential Profit

3. Experiment and Build An MPV

MPV is the abbreviation for Minimum Product Viable. It is what the name itself says: a version of the product that is being designed to test and verify. Therefore, create a prototype that represents the product or service it will offer. This will be done to test it in real situations with potential customers. At that moment, it will be possible to know if the idea has potential or not. Moreover, initial ideas are just starting base points to build a better and refined product. In the business idea validation process, you get a chance to experiment with your product in the following ways:

  • Build an MVP – Landing Page, Outreach emails, and physical prototype
  • Prototype
  • Conducting surveys and interviews
  • A/B Testing
  • Crowdfunding

4. Start Capturing The First Customers

Starting to get the first customers should be one of your priorities. They will help you validate much of the idea, provide feedback, and the main thing is to buy your solution.

Also, remember that if the idea is not recognized as a great solution and if the audience does not understand why it was created, it will be difficult to turn it into a profitable business. Therefore, having a marketing and sales plan is vital for the success of the business.

So, after testing your MVP and successful results, you might feel that you are winning an idea that will build your brand around it. Now you need to focus on two questions:

  • How do I get my first customers?
  • How do I get my N-th customers?

You might be confident that you have the best business plan in the world, but without customers, the whole business plan is nothing. Therefore, you need to create a promising customer acquisition strategy and marketing strategy. It is good practice to be prepared by explaining it to investors, partners, and stakeholders during idea validation itself. All you need to remember is,

“It is much easier to build a brand around a demand , than to build a demand around the brand.”

Business Idea Validation Checklist

Before making your developed product online in the market, you should check for the chances to succeed. You should keep a critical eye on these aspects throughout the process and check after creating the product.

  • Right Time: Despite having a groundbreaking idea, sometimes the wrong launching moment can be a costly error.
  • First Customers: These are those users who will use your product first. So, you should not leave any chance behind to identify these users’ feedback and evaluate it with your product functions.
  • Meeting the Demands of Customers: The feedback you acquire from your customers will help you analyze to what extent your product meets their needs and works as expected.
  • Advantage: You need to compare your gathered insights with your competitors to analyze your designed product’s success. Moreover, you can also use a business model canvas to identify the advantages and disadvantages of your product.
  • Complexity level: Rather than assumptions from gathered information, you should ask your customers directly, “Are they comfortable with the product and enjoying benefits from it?”
  • Simplicity: If you are not able to define what your product is in one sentence, then hold on. You need to sort out the vague ideas to ensure the whole idea is simple enough that everyone gets it.


Despite following an organized approach of idea validation, you need to understand it cannot eliminate all the problems. Therefore, you need to be active and prepared enough to handle other downsides also with a great business idea. Furthermore, business idea validation is just an effective way to minimize risks and MVP development costs. Yet, you need to consider validating your business idea to know if it has a potential market demand or it can bring a high turnover in your business plans.

Here, at Clustox, we focus on helping business startups to build a valuable market-driven tech product. Our first step of developing a successful product is conducting deep market research, competitive analysis, and customer requirements. It helps business startups to save some thousands of dollars and even more. You can talk to us, and we will help you to conduct the discovery phase properly. So, identify core competitors, create a marketing strategy and UX prototypes at extremely low cost with Clustox- software development experts today!

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