Joel Syder, PhdKingdom
The sooner you test-drive your business idea, the better. Once you’ve thought it out and put it down in a business plan, it’s time to present it to the world. But what is the best way to actually test out your business plan to find out how feasible it is and how receptive the market is? Here are some ways to test out your business idea.
Crowdsourcing can be a great way to test out your new business idea. Take your idea to a platform such as Kickstarter to see how people react. You’ll know if you’re on the right track if you begin receiving pledges and pre-orders for your product. Don’t worry if your project doesn’t meet its funding goal; everyone will get their pledges back, no harm done, and you’ll have gained some valuable insights.
Put yourself out there as a freelancer
Try your hand at freelancing and entrepreneurship by using sites such as UpWork and Freelancer. You can sign up quickly and for free. You’re best off looking for higher-end jobs where you won’t have people low-balling you. Just be prepared to charge what you’re worth, so you can attract clients who are willing to pay well for quality work. This means putting some thought and effort into writing solid bids for jobs you’re interested in. Your short-term goal should be to establish yourself with some positive reviews, so you can keep attracting clients. Once you’ve established yourself as a freelancer, you’re in a much better position to validate your business idea.
Develop your hypotheses
You’ve probably got a list of assumptions you’ve made about your customers. You need to take these things (price points, pain points, preferences, etc.) and turn them into hypotheses. Convert your assumption that your target market will buy more of your stuff at a cheaper rate into a hypothesis that if you lower your product’s price, the frequency of your customers’ purchases will increase. “Creating a hypothesis out of an assumption basically means making something specific and actionable. Investing more in social media doesn’t mean much, but devoting an hour of your day responding to your customers’ questions does,” writes Diane Bridges, business consultant at Australia2Write and BritStudent.
Test those hypotheses
There’s no use in having a hypothesis if you don’t put it to the test. This can mean A/B testing, surveys, or even interviews. You might want to use A/B testing if you’re curious about something such as how your customers feel about customization. “If you’re curious about how spot-on your pricing is, then you’re better off conducting some exit interviews with people who declined to purchase. You can even set up software to notify people who abandon carts in your online store and give them an option to complete a survey about why,” recommends Stacy Reese, startup blogger at NextCourseWork.
Ask the right questions
Surveys and interviews are all about asking the right questions, and a lot of that means avoiding leading questions. It’s better to ask open-ended questions such as “What was the biggest thing that kept your from buying?” rather than “Was the price a big part of your decision not to buy?” You should ask in a way that allows the customer to answer honestly and without having a factor put into their mind. True, price is always a factor, but there can be others, and your job is to find out what they are.
More ways to test out your business idea
Do your research and identify a community you have good reasons to believe will be interested in your idea. Contact them online and pitch your product or service to them in the most basic way possible. Provide incentives to encourage people to reply and provide you feedback, remember to fill them in on pricing delivery, etc. Try offering a free trial if you can afford it; free trials can be very effective ways to test out your business idea.
The best way to gauge the effectiveness of your business idea is by letting your customers lead you. Putting your idea out there gets it out of your head and into reality and get rid of your own flawed assumptions. In the end, your business plan will be much stronger, and you’ll be prepared for when you actually launch your business.
About the Author: Joel Syder tutors and writes about business over at PhdKingdom. He also loves to teach people about how to succeed in the business work, along with writing articles about the things he is passionate about.