3 Key Questions to Ask About Validating Your Business

  • Posted on: 12 May 2015
  • By: Leonard Shostak

There are many entrepreneurs and business owners who start businesses based on an idea or passion they have. Quite often, they build a business around a product and/or service they strongly believe is needed, without validating their assumption with their potential customers. What makes this initial phase even more flawed is that most entrepreneurs don’t even know who their ideal customer is. Business owners and entrepreneurial individuals who are masters at what they do always validate their business idea before they start implementing it. Here are three questions to explore in depth in order to validate your business.

1. Is your product or service addressing a real need or solving an actual pain point?

Working on a product or service based on the assumption that it is a valuable offering is not the smartest way to invest your time and efforts into a new business. Instead of assuming that a product or service has a demand, reach out to your ideal market and find out if that is indeed the case. Of course, having a clear idea of who your ideal customers are and where to reach them is the first step. Asking the right questions about their pain points and whether your product or service addresses them are next. Finding out if your ideal customer is actually willing AND able to pay for your product or service is last. Once you identify that your product or service addresses a real need or a sticky point with your customers, then you know that you are on the right track with your business idea.

2. What is the need or the challenge that your product or service addresses?

Once you identify your ideal customers and reach out to learn more about their needs, hopes and fears, it is key to find out what need your customers have or what challenges stay in their way. Being clear on what these are and how much of a priority they are for your customers is important. If your customers truly care about having their challenge addressed or desperately want their pain points resolved, while realizing that your product or service will do that for them, that is a good sign that your business idea creates real value for your customers.

3. Is your ideal client willing and able to pay for your product or service?

Knowing that your customers are excited about your business offering is a good validation sign. However, most people would express desire or approval for a product or service out of being polite. What truly validates if a business idea is a valuable and a profitable one is your customers’ willingness AND ability to pay for your product or service. There are many cases when potential clients get excited about an idea but never purchase a product or service. Usually there are two reasons for that - the customer is either unable to pay for the business offering OR it is not a high priority or pain point for them. Thus, learning as much as possible about how important your product or service is for a customer is extremely valuable. Finding out how willing and able they are to pay for it are also strong validating factors for a business idea.

Doing market research when one is excited about a business idea is usually not the most exciting step of launching a business. However, market research is one of the most important first steps of validating a business offering. Spending one’s time and efforts on an idea that has not been validated is not the best way to invest one’s resources into a business idea. Asking the right questions to validate a business offering and following the process of doing in-depth market research are key steps before implementing a business idea.