How to validate your new idea

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06/09/2017

The most successful businesses are those that don't rest on their laurels; they're always looking for new ways to grow. Business growth is the key to increased profits and boosting brand awareness.

One of the best ways to achieve business growth is to expand your range with new products and services. And if you've come up with an idea, well done! Keep in mind, coming up with a new idea doesn't mean it's never been thought of before; Steve Jobs didn't invent the computer, for example, but he and his development teams did come up with Apple. A significant improvement is as valuable as a brand new product.

Although it's an achievement in itself to think up something new, it still needs to be validated. You need to be sure that it's feasible in the current marketplace, and that it'll add value to your core business. Equally important is to determine if it solves a problem. People buy solutions for pain points, whether it's a need, a want or a desire.

Undertake market research

You won't be a stranger to this process. You should have gone through it when you started your business, especially if what you're selling was a new idea back then. But it's important to go through it again with any new idea, so you can be sure that your target market is as enthusiastic about it as you are, that you're giving them something they want – solving a pain point. Here's a reminder of the basics:

• Talk to your customers. Tell them about your idea and get their feedback. Specifically ask them if they'd purchase it, and get an idea of what they'd be willing to pay for it.
• Research your competition. Has anyone thought of the idea before you? If so, how's it selling? Are there ways that you can improve on it to gain a competitive advantage?
• If anyone's selling something very similar, look it up through the UK Intellectual Property Office so you're clear on the intellectual property status. It may be that your plans will grind to a halt if someone else has had the idea ahead of you. At the very least, you can think about ways to update your original idea to sufficiently differentiate it from the competition – also good for your competitive advantage.
• Use your networking contacts to generate feedback. Industry associations, Chambers of Commerce and networking events are all good ways to talk to people in your industry and research statistics to determine the potential of your idea.

Update your idea

It's important to remain flexible. Your market research may show you a number of ways your idea can be updated to fit your target market. Realising that your original brainwave isn't going to be the perfect fit you envisaged isn't a bad thing at all; it gives you the opportunity to tweak until it's properly differentiated from anything similar that might already on the market. Remember that your idea should be solving a problem, and the better you understand that problem, the more appealing you can make your idea.

Check your idea will make money

This is really about making sure you can sell it for more than it costs to make or provide. Add up all the costs of manufacturing your product or providing your service, then add your desired margin on top of it to determine price.

The feedback you got from your market research should have given you an indication of how much people would be prepared to pay for it (or what they are paying for it if something similar is already on the market), and from there you can decide if you'll make enough of a profit for the idea to be worth your time.

• Check your capacity - do you have the necessary equipment, staff, skills and knowledge for the new idea?
• Do some sample selling – enter trade shows as an exhibitor, and include your new idea among your core products or services. Gather feedback from customers and analyse the results. How popular was it?

Summary

Sometimes, business owners, especially those that are natural-born entrepreneurs at heart, can get so excited about a new idea that they lose objectivity. They'll plough full-steam ahead, without taking the time to do their due diligence. This can mean that a potentially great idea is destined for failure simply because they didn't do their homework. Thorough planning and research is essential for validating your new idea, so it has a better chance of success in the marketplace.

Additional resources

• 9 entrepreneurs reveal how they validated their business idea
• 6 ways to validate a product idea before you waste time and money
• How to validate your product idea