How to TEST Your Business Idea (Transcript)
I know not everyone was able to participate as a student in VALIDATE, so today on the podcast I’m doing something very special: offering a crash course on how to do the validation process for yourself!
If you’re a DIY’er then you’ll love this episode. Not only is it the “do it yourself” guide to testing your biz idea, but it’s also going to ensure that all your future business DIY projects have much greater chances of being successful!
This is a transcript of Work Less, Earn More, Episode 58. Listen to the episode here.
We became entrepreneurs because more than anything, we want freedom. We want to be in control of our own schedule, income, and life, but unfortunately, that isn't always the reality of being a business owner. I'm Gillian Perkins, and I'm on a mission to take back entrepreneurship for what it's supposed to be. In every episode, I'll share with you how to get the most out of every hour you work so that you can work less and earn more. Let's get to it.
Hi there, everyone, and welcome to today's live session. So in today's episode, what I'm going to be talking about is how to validate your business idea. So, first of all, let's just talk about why you would want to validate your business idea. Well, I think that one of the deepest fears of every new entrepreneur, as they're trying to get their business off the ground is, “What if I'm building the wrong business? What if I'm pouring all of this time and energy and maybe money into a business idea that in the long term isn't going to pan out? There isn't really a big opportunity for the business I'm building. There isn't a lot of demand in the market for it.”
I've been there myself and I've spent time building businesses that it turned out there wasn't demand for. And it just was such a shame that I spend all that time building a business that ended up being a waste of my time. So what I'm going to talk about in today's episode is a six step process that you can follow to test your business idea before you get started. And in doing this, you're both going to make sure that you're building the right business and really get that confidence that you need to be confident going all in with your business idea. But you're also going to learn a lot of valuable information about who wants your product and why they want it and how to effectively sell it so that when you do really start your business and you start trying to grow your business, you can do so with a lot more ease than if you were just starting completely from scratch.
Choosing One Idea
So with that being said, let's talk about the first step. Now, the first step is just that you need to choose one idea to validate. Here's a mistake I made, I was trying to test out multiple ideas at the same time. I was doing this because I had a bit of a scarcity mindset. I wasn't really sure that any of them were going to pan out. And so, because of that, I wanted to make sure that I had eggs in lots of different baskets. I wanted to make sure that one of them would work out, so I wanted to try a lot of different things. And I see a lot of people doing this same thing, where they're not quite sure which idea is going to work so they want to offer several different services. They want to sell several different products, maybe even build several completely different businesses at the same time.
Sometimes it's as simple as wanting to have multiple websites at the same time and maintain them and create content on each of them. But if you want to be able to validate an idea, you need to really choose exactly which idea you are going to be running through this testing process so that you can focus on that idea and go all in with that idea before you try a different idea. And of course, this doesn't mean that you're deciding one business idea that you're going to stick with absolutely forever. In fact, it's quite the opposite because we are saying we're just going to go through this testing process with this idea and if it works out great, we can go with it. Or of course, we always can change our mind if we decide we'd simply don't like running this business after all. But if it doesn't work out, then we are going to switch and try a different idea, test a different idea, and really go with a different option.
So we're not locking ourselves in forever, we are just committing to seeing one idea through the testing process. Because if you don't do this, what's going to happen is you will be trying to build multiple businesses at the same time and you will never go all in enough with one of them to find out for sure if it works. And so, that is just going to be the most likely scenario in which you wind up wasting a lot of time, the very thing you are trying to avoid. You're trying to avoid that possible loss of time, of resources, but if you don't do this first step and choose one idea to validate first, then you'll be bringing that upon yourself. So, I know that it's simple and you may have already done this, but if you haven't yet, make sure that you pick one idea to go through the validation process with first.
Clarify The Results
Once you've done that, then the second thing you need to do is to clarify the main results that your product creates. Okay, so in doing this, it's like you're creating an elevator pitch or something like that. But it's different because in trying to clarify this main value, you are not going to be trying to make it sound as persuasive and amazing as possible, in fact, you're almost going to do the opposite. You're going to just hone in on the clear, specific, simple value your product provides. So, instead of talking about your amazing seven step coaching program that will transform people's lives, instead you're just going to say, “I will help you do X, Y, Z,” or, “I will help you lose weight,” or, “I will help you start your online business. I will help you teach your child to sleep through the night. I will teach you to grow an organic garden.” We want to get really clear, really specific about exactly what the value is and if possible, we want this value to be as tangible as possible.
Something that can be measured, something that the customer, if they choose to buy your products, we'll be able to tell for sure whether or not they got. Now, the reason why we want it to be so tangible is because as we're then later trying to sell this product, if the customer knows when they hear what your product does, if they know that they'll be able to tell whether or not they actually got that result, they will be much more interested in purchasing your product. On the other hand, if it's something that is not very measurable, well, then they will not feel very confident that they will for sure get that value. So, that is the specific element of persuasion that we do want built into this value, you're figuring out your product offers, but the most important thing here is just that it's clear, it's specific.
We don't want to be trying to sell something big. We don't want to be trying to test a vague idea because it will be very difficult to know if you do that, whether or not people didn't want what you were actually selling, or they simply didn't understand it. So we want to, first of all, just make sure we are completely clear about what we are selling, what we are testing, both so that we know what we're selling, but also so that our customers, our potential customers can give us good feedback about whether or not they actually want that thing. They need to understand what that thing actually is. So, once you've done these first two steps, the next one will be to talk to people who want this result. So this is where you get into the market research side of things and you start figuring out, you start learning about what the market wants.
This is the step that, I would say, more than anything else, new entrepreneurs skip for a few reasons. First of all, it can be awkward to talk to people, right? A lot of us are at least a little bit shy and just getting out there and telling people about our product idea can feel a little bit uncomfortable. Another really common reason is because people don't know where to find people to talk to about their business idea or the product idea. They don't know where to find their target audience. We'll talk about that a little bit more here in a minute. And then another reason is because since you don't know yet that your product idea is valid, that people actually want it, it will make you extra hesitant to share it with people because you don't know if they're going to be interested in it.
So there are a lot of reasons why this step of talking to prospective customers about your product can be difficult and you might want to skip it. But now, let me tell you a few reasons why you don't want to skip it. So, first of all, when you go out there and talk to people, you have to find the people, right? And that's the hardest part. But think about it this way, whether you find the people now in the testing phase, or you wait until you're actually trying to sell the product, either way, you have to find people. You have to find people to buy your product in order to ever sell your product and make money. So when you think about it that way, then you realize, “Okay, I'm going to have to do this work anyway.”
And you might as well do it now in the testing phase, because if you do it now, then you'll be able to get that intel you need and learn about these prospects before you're trying to sell to them, so that you can make sure that you're selling exactly what they want and that you're communicating with them in ways that they understand. So what I mean by that is when you talk to them, you're going to ask them about what it is they're looking for and why they're interested in that outcome and what has held them back from getting that outcome so far. And you will learn the words that they use to describe what they want and why they want it, and the objections they have to the options that are out there right now. And you'll be able to speak those words back to them in your marketing message and really connect with them, use language that they really understand.
And that is going to just give you the biggest advantage possible when you are trying to sell this product. So I would say that, that is the main reason why you want to do this market research, why you want to get up there and talk to people. Beyond that, it is obviously going to stretch you as an entrepreneur and help you to get out of your comfort zone, help you to get into this mindset of reaching out to people, which is so necessary for building your business and effectively marketing your product and your business. So, it's going to teach you so much personally, give you so much valuable information, and it also, of course, will start to give you a sense of the demand of the product also. So, what I mean by that is when you go out there and you try to find people who are interested in your product idea, even though you're not trying to sell it yet, what you will be doing is you will get a sense of how many people are out there and how strong their desire for your product is.
And if you realize that it is being really difficult to find people who want this outcome that you're offering, or that it's being really difficult to connect with them, then that can give you some early on insight into the fact that maybe there's not that much demand. On the other hand, if you start trying to talk to people, and you're just overwhelmed with all the people who are interested in your product idea, then that can be a really good sign and give you more proof of the concept of your business. So before we move on to step number four, I just wanted to let you guys know that there is a free checklist that you can download, that goes along with today's episode. It will walk you through these six steps. So, if you're trying to take notes right now, but maybe you are driving or multitasking, washing the dishes or something, and you are not able to do that, then be sure to go to gillianperkins.com/free-validate-checklist. And I'll be sure to include a link to that in the show notes as well.
But what you'll find when you go to that link is the opportunity to download this checklist of these six steps for validating your business idea. Not only will that give you a summary of today's episode and just make it easier to follow along with the whole process, but it also is going to allow you to check the steps off as you complete them, and to help you stay on track. And you can use this checklist multiple times, printing off another copy of it each time to be able to use if you test one business idea, and then you discover there isn't enough demand for it, because that is always certainly a possible outcome of the validation process. And so, then you can print off another copy and reuse it for your second business idea, and so on, until you find one that is successful, that you find a lot of demand for, and you decide to go with that business idea.
Create a Beta Version
So again, you can find that checklist at gillianperkins.com/free-validate-checklist. Okay. So let's move on now and talk about the fourth step of the validation process. The fourth step is to create a beta version of your product that you can quickly launch. So, why we want to create a beta version of your product is because we want to avoid spending too much time creating product before we know that there is demand for it. I see this happen all the time, where someone has a brilliant idea for a course or a program or a physical product, and so they just go to work. They go into their workshop, which might be a corner of their dining room, or it might be their garage, or it might be their bedroom or their office, wherever they're creative spaces is. They go in there and they just get to work and they start building this thing that they think can change the world, and they spend a lot of time.
Sometimes weeks, sometimes months, sometimes years. Pretty often, really, years trying to build this product. And it always ends up being a bit bigger and more complicated than they thought it would be, but they are sure that people will want this, that it is going to be a moneymaker for them. It's going to have a positive impact on the world, and so they don't care how long it takes. But not only does it get bigger and more complicated, but they also do lose a bit of momentum. So, it takes even longer for that reason as well. Then they finally emerge into the world with this giant thing that they have built and they try to sell it, but they really struggled to sell it. In fact, maybe they never sell a single copy of it. Maybe they never sell a single product, and there can be a few different reasons for this.
First of all, they didn't take the time to validate the idea first, so there might simply have not been demand for it. But maybe there was some demand for it, but because they didn't do the market research first and the whole validation process, they didn't learn what people were really looking for with this product. And so they didn't build it quite to their target customers specifications, quite what people were looking for. And so in doing this, they've just shot themselves in the foot, and they've really made a lot of other people miss out on what could have been a great product as well. So, that's why I really encourage you to go through this validation process, but also to specifically create a beta product. So, what a beta product is, is its just a simple paired-down version of your product idea.
So for example, let's say you are thinking to create an online course. Instead of creating your full 30 lesson online course, with all these bonus PDFs and extra resources, instead, could you create a short, simple workshop that maybe is just one 30 minute video or three short videos that teach people the main concept or something related to that main outcome of the course, but are way, way, way less work for you to create. You can create them in an afternoon, maybe even less. Plan out these lessons or this one lesson and record it and then offer it and for a lower price, because it's not this large product that clearly needs to have this high ticket price with it. Another option for a beta product that would be a course would be if you just planned it, and then you told people that you were going to be offering a live workshop on a specific date. And so then you're not really creating the thing at all, you're just asking people if they want to purchase it.
And then if people say yes, then you teach that live workshop and then you can sell that recorded workshop for a similar price that you sell the live workshop too. And then you can work on expanding it into a larger product that you can sell for a higher price later on. So, this was just an example I used with an online course, but you can do something similar, whether you're selling a physical product, a service or anything else. You can create a simpler version of it that still provides a similar outcome. If it's a physical product, then this will be some sort of prototype version, or you can go the kick starter route and ask people to purchase your product ahead of time before it's even released. And then if it's a service, just create a simpler, more affordable package that doesn't provide all the bells and whistles that your main service, your premium service will provide later on, but instead just gives people a taste of how amazing it is to work with you and the results you can create.
Launching Your Product
In doing this, not only are you going to get your proof of concept, but you're also going to get testimonials and reviews for your product, which will make it a lot easier to market later on. And so, I've bled into step five here, which is to launch the beta product. Step four is to create the beta product. Step five is to launch it. Now, when you launch your product, I already talked about how you can pre-sell it, but let's talk a little bit about the actual strategies you can use to launch it. Strategies that are personal and direct, are going to be your best friend here. I want that to be your mantra, as you are planning out your marketing strategies for your launch, personal and direct, personal and direct.
So what I don't want you to do is I don't want you to try to post on all the social media platforms, send out a million emails to your email list, and spend a bunch of money on advertising, host 10 webinars, or anything like that. All of these strategies are very, very mass marketing strategies, where you're trying to tell a whole lot of people about your product. But when your audience is small, when you're first starting out, when you're selling a new product, you need to connect with people in a much more direct and personal way. Because first of all, if your audience is small, you need to convert a much higher percentage of them than if your audience is large. So if you have an audience of a million people and you convert just 1% of them, well, that's a whole lot of sales, okay?
But if you have an audience of only a 100 people and you convert just 1% of them, that's only one sale. And that's not going to be enough to really get you the data you need and determine that there's enough demand for it. So, we don't want to use strategies like email marketing and Facebook ads and social media marketing that often are converting at about 1%. Instead, we need to be talking directly to people and really connecting with people so that we can have a conversation about them. So, that not only will we learn why they're interested in buying or not interested in buying, but also we can convert at least about five to 10% of them and actually get some good market data.
So, strategies I'm talking about here are literally telling the people you know about this new business that you are starting, or this new product you're creating, and asking them if they know anyone who might be interested in what you're doing, or who wants the outcome that your product offers. Because remember, way back there in step number two of this validation process, you clarified exactly what that value is that your product offers. So, if you're teaching a course about gardening, you clarify that what your course does is it teaches people how to grow an organic garden. So, then you can ask all of your friends, your mom, your brother, you can ask them, “Hey, do you know anyone who is interested in learning how to garden or who is interested in organic gardening?” Tell them what you're up to and maybe they know someone, maybe they don't. But you just want to start putting these feelers out there, because that is a great way you can start to make connections if you have absolutely no audience right now.
You also can partner with people who already have an audience, perhaps someone who runs a Facebook group for your target customer, or who has an audience on Instagram or another social media platform of your target customer. And what you can do with them is you can partner with them to do a survey of this group, or to host a challenge for this group. And in doing this, you can get more exposure for your brand and your new product. There are lots of other more direct and personal marketing strategies that you can use for this process. But the main point here is I want you to use those direct and personal marketing strategies, not just try to rank on Google or try to share your pins on as many boards as you can. Because while that will get you a little bit of exposure, you'll be going broad, rather than deep. And for these initial sales, you really need to go deep.
You need to do things that honestly won't scale. Later, as you're trying to scale your business, you want to do those things that you can use to reach the masses, that you can automate. But when you're first starting out, you need to go deep with people, rather than go broad.
The episode you're currently listening to was originally offered as a livestream inside Startup Society, our training program for digital entrepreneurs. Each week in the program, Gillian teaches a live workshop for startup members, including a teaching segment, like what you're listening to right now, a tutorial segment that demonstrates how to take action on the lesson, and an open Q&A period where Gillian and guest experts work directly with each member.
Members also get access to Startup Society's library of business training courses, monthly co-working sessions, and other events, and our private community forum. If you're looking for affordable business training, mentorship, and accountability, then visit startupsociety.com/podcast, to learn more about the program and apply to join. Now, here's Gillian with the rest of today's episode.
So, at this point in the process after step five, you're going to have learned a lot of information about your product. So, the first two steps are just about you clarifying your product idea and exactly the value that it offers. Step three is all about doing that market research and getting out there and talking to people and learning what they're really looking for and why they want it, and what's stopping them from getting that result they want right now so that you can really formulate your product and your marketing messages to be exactly what they're looking for. Then steps four and five are about creating and launching your beta product because when you do this, you're going to get that absolute proof, whether or not people want your product. People will be voting with their dollars, whether they want your product.
If you see a lack of interest, then that tells you something. If you see sales, that tells you something. And so now that you've gathered all this data, then you come to step six, and step six is simply to keep an open mind. It is so tempting at this point in the process to try to force the outcome, to say, “Well, I've created this product now. I might as well sell it, or maybe I just didn't do this well enough.” And of course, that's always a possibility. Maybe you didn't do enough market research. Maybe you didn't use the best strategies for your beta launch. Maybe you didn't word your marketing messages in quite the right way, but we also need to keep an open mind to the possibility that maybe there simply isn't enough demand for your product idea. And honestly, that's not a bad outcome because I know you have other business ideas in you.
And I want you to find the best business idea, not just run with this one, because you've already started working on it a little bit. So be open to the possibility that there's about a 50/50% chance that your business idea might be successful. There might be demand for it, but there also might not be. And if there isn't, that is a good sign, it gives you permission to move on, to pass on from that business idea you have been testing out. Instead, move on to a better business idea that there'll be more demand for. Of course, you need to keep that mindset throughout this entire process. If you're struggling with any one of these steps, know that there are a few different reasons why it might be challenging. One is just because these things aren't easy. So, it is going to be difficult to narrow down your product idea.
It is going to be difficult to get out there and talk to people and do that market research. It will be a little bit difficult to create that beta product and launch it. So, there is going to be some resistance. So, that's the first reason you might find this a little difficult. The second reason is because you might not be going about the steps quite right. So for example, as you're trying to do your market research, something we've been seeing come up for a lot of our validate students lately is just not quite knowing where to reach out to people. So in doing this, they're thinking, “Okay, where can I reach a bunch of people? Facebook groups.” So they go and they post in Facebook groups that they don't get very good results sometimes. So we need to turn on our creative minds, maybe get a little bit of guidance from someone who's done this before, and figure out where we can actually connect with people so that we can do the market research that we're looking to do.
But then the third and final reason why you might struggle with any of these steps is because there might be a lack of demand for your product idea, which is going to make each and every one of these steps difficult. So again, step six is all about just keeping an open mind, being open to possibility that there might be demand and there might not, and that is why we're doing this validation process to figure that out for sure. So right now, we are working with a group of students inside our validate program, and what we're doing with them is just guiding them through each of these steps. And we have an entire module around each of these steps and we're spending about one to two weeks on each of them so that we can really guide them and make sure that they are successful to the process, so that we can completely rule out the second thing that might prevent them from getting a good result.
So again, first thing is, these things are just challenging. So there will be challenges, right? Second thing though, is maybe you don't go about these things quite right, and so you struggle to complete this validation process. And then the third thing is maybe there isn't demand for your product. So, we want to rule out that second thing that could hold people back and make sure that we are guiding people through the process and making it as easy for them, so that we're practically ruling out the first thing as well, so that they can focus on that third thing. And just simply figure out, is there demand for this, is there not, so that they can get that confident result at the end. They can be confident of the result they get and know for sure if people want their business idea, their product, so that they know whether they should go all in with this process or whether they should maybe re-test a different business idea instead.
Thanks for listening to this episode of Work Less, Earn More. Before we wrap this up, listening to this question, a Startup Society member asked during the livestream.
So the first question I see here is from Anna Sophia and Anna Sophia says, “Can I use the checklist to validate a product?” The answer, Anna Sophia, is yes, you certainly can. Now, it's not going to go nearly, nearly, nearly as deep as we go inside the validate program, where we are teaching you how to do each and every step and really guiding you through the entire process. But it is going to give you a framework that you can follow if you are more of the DIY type, and maybe you already have some business experience and you just need some guidance through this validation process, that it will definitely keep you on track and it's a great place to get started.
So let's go ahead and talk a bit more about how you can clarify that outcome that your product creates. So this is step two of the validation process, clarify the main result your product creates. So inside the validate course, we have this concept called PTR, primary tangible result. And so what your PTR is, is it's that main outcome of your product. So for example, if you offer editing services, so you edit people's manuscripts, then that is essentially your PTR. So, you provide editing services to writers. So your PTR statement is going to tell you, is going to describe who you're providing your service to or who your product is for, and then what outcome they get from it.
And when we think about outcomes, we want to make sure that they are really specific, that they are really tangible, and that people really understand exactly what that value is. So think about if someone buys a vacuum cleaner, it would be really easy to say we sell vacuum cleaners to moms, but that's not really talking about the outcome that they get. You're not just providing moms with vacuum cleaners, you're providing moms with clean floors. And really it's not just moms, of course, right? Although you might market your vacuum cleaners just to moms, but you're providing homeowners or you're providing, I mean, really vacuum cleaners are for almost everybody, right? Adults.
So here you might not have a very specific identity that you're marketing to, but a lot of products, you want to narrow it down to at least a general group. We'll talk more about that in just a moment. But so here with the vacuum cleaners, it is the clean floor that is the result the people are really looking to get when they purchase a vacuum cleaner. An example that's really often used is when someone buys a drill, they don't want a drill, they want holes in things. That's why they're buying that drill so that they can make holes in things. And so whatever your product is, think about that end result it creates, not just what the product itself is. As for who you are marketing it to, this is where I think so many people get tripped up because they try to narrow down their target customer really specifically.
So they say, “Okay, my product is for men who live in Western United States, maybe they live in the Northwest. Men in the Northwest who like to use natural products and who are vegans.” And so they'll get really specific like this, talking about a lot of different attributes of their target customer. And later on, you might get to know the person who does buy your product really well, and you might learn that a lot of them fit into this specific mold and have a lot of things in common. But when you're first trying to test your business idea, you do not want to pigeonhole yourself in that way. There are only two things I want you to define your target customer based on. One is a very simple, what we call instant identity. So, this is just a very general group of people, something like moms or men or dads or entrepreneurs or athletes, very broad group. Just so we can figure out in a general sense, who's this for.
And so that when we ask, who would help us with this market research, we can call them out by name and they immediately know that we're talking to them. The second thing we're defining that target customer by is just people who want the result that we're offering, so in the vacuum cleaner example, people who want clean floors. So now our target customer's anyone who wants clean floors, but it's no one who doesn't. And that is the exact specific thing we need to make a black and white issue about here. If you want clean floors, our product is for you. If you don't, it's not for you. Think about the organic gardening course, a example that I gave earlier. So you're selling a course about gardening. Specifically, it teaches people how to create, how to plant and grow an organic garden. So your course is for people who want to grow an organic garden, and it's not for anyone else who doesn't want that.
That is the most important issue to divide people on when you're trying to sort out who your product is for. Because it's narrowing you down exactly the right amount, so that now you're only talking to that small group of people who wants that outcome, and you're not talking to anyone else. So when you are coming up with your, what we call a PTR, your primary tangible result, and that's what you need to think about, instant identity, who is this for in really simple terms? Is it for moms? Is it for entrepreneurs? Is it for business people? Is it for politicians? Who is this for in really simple sense, and then what is the outcome it provides? All right, well, we are going to wrap up this episode. Thank you so much to everyone who joined me live and for everyone who is listening to the podcast later on, thank you so much for joining me for today's episode. I hope that you found it helpful to learn all about the validation process.
As I mentioned earlier on, there is a free checklist you can download that goes along with this episode. You can find it at gillianperkins.com/free-validate-checklist. And then beyond that, if you're interested in working directly with us to validate your product idea, as I mentioned, we have a program, but we run it live so you cannot join it right now, depending on when you're listening to this, of course. But most of the time you can't join the program because it's only open for very limited enrollment periods, but you can go to gillianperkins.com/validate, and you can join the wait list there. Or if the program happens to be open, when you visit the page, then you will see the opportunity to enroll.
We would love to have you join us for the program if you have a business idea that you'd like to test out and get that confidence, whether or not it is the right business that you should invest your time in. In the program, we guide you to do all the steps I talked about, including specifically, beta launch your product and earn your first $1,000 to get that proof that people really want your business idea. So with that said, let's wrap up today's episode. Thank you so much to everyone who joined me today. And I'll be back again next week with another episode