Coming up with an idea for a product or service is not the hardest thing for startups and entrepreneurs. Building a product isn’t even the hardest. Truly, the hardest part is “making it work”, or in other words, getting people to like and want to buy your product, and beating the competition at the same time.
The markets today are as competitive as never before and naturally everyone wants a piece of a pie. One day you may think of a brilliant startup idea and surely you’d want to check if it already exists at all, or if it exists in your country/region, or if it exists in your industry/niche.
And firstly, you should know that it most likely does exist! But that’s not the point (more on that in a moment). You shouldn’t let that fact discourage you. Secondly, if you’re wondering how to verify a startup idea – spoiler alert – there’s no 100% right way to do it. There are some tools and tips, which we’ll list, but the only real validation you can get is to grow a business/a startup for 1 or 2 years and see if you can make it profitable.
On a bright side, there is always room for new opportunities. Fifteen years ago, there was no Uber and all seemed fine. But the idea behind Uber brought a revolution to transportation, and now we can’t imagine it otherwise. The story of Dropbox also has become viral among marketers and investors. When pitching his startup idea, Dropbox founder Drew Houston was asked why should anyone invest in his company when there are dozens of similar ones already. He asked in return if anyone is actually using those companies’ services. And the answer was no.
“It’s an asset to not know everything about everything… A lot of really great, innovative things have happened when people just didn’t know it wasn’t supposed to be possible.” – Drew Houston
So there’s always space to improve things, to make people’s lives better, easier, more comfortable. Ideas are just ideas, just guesses, any startup idea possibly exists out there in the world. But it’s execution/implementation that matters most, not the idea itself. Make your product or service better than others, learn from others’ mistakes.
Enough with this reasoning – let’s not get off our course. So how do you verify a startup idea? Let’s begin with things that you have to verify.
What you need to verify
With billions of people, there is no shortage of ideas, but when we’re talking about startup ideas, the important thing is that it has to bring profit. That’s the goal, and for that, your idea has to be helpful, it has to tackle some problem, no matter how small or big. Your only real validation is going to be money earned.
So, at the very beginning, you should determine these points:
- A problem to address
- The solution to it
- Target customers to sell the solution to
- The price
Now, the things you need to find out.
#1 Who is your competitor?
Or ‘who would be a competitor’ should we say? Because you’re doing it before even starting a business, and that’s the right way, however odd it may sound. Learn competitors’ strategies, their customers, strengths, and weaknesses, think of what and how you could do better.
To help you out, check this about companies:
- What’s their brand?
- How many employees and what kind of employees?
- What’s their budget/investment?
- Who’s the owner?
- What’s the annual profit?
- What’s their business strategy?
About their customers:
- What customers are targeted?
- How do they reach those customers?
- Do they try to gain customer loyalty?
- How many customers do they have?
About their products/services:
- What exactly are they selling?
- The price of a product
- What’s the key feature that engages customers?
- How are products delivered?
This should bring some clarity about your startup idea, help you define what would you do differently, and hopefully better. Will it have better features?… faster/better delivery?… or a totally different approach?
Note: If you can’t find competitors, you are doing something wrong.
#2 Research the market.
Yes, it may sound trivial, but Google it. Do not rush – take a few days to research the market and the niche you’re interested in. Find out whether someone is already doing what you have in mind. Are their efforts successful and if not, what did they do wrong? No matter how unique your idea may seem, it’s a mistake not to dig into the market.
The key then is execution. With thousands of hotels, all with online reservation options, Booking.com managed to offer the undeniable “win-win” service and firmly grasp its niche. If you see your idea standing out from others in a new way, that’s a first positive sign for a startup.
#3 Study the demand.
No actual market demand is the #1 reason why so many startups fail. There are 4 good practices to quickly and quantitatively discover if customers need your product and would be willing to pay for it:
- Talk to people face-to-face. In real conversations with real people (friends, workmates, businessmen, investors) you may share your idea and see if your enthusiasm transfers to others or not. Ask what are they using and how satisfied they are. Pitch your idea and see if people understand it and how they react to it.
- Conduct surveys. Based on facts learned from conversations, draft more specific surveys to be able to segment responses in the end. Tools like Google Surveys, Survey Monkey, Survata, etc. can be handy. Use 5-point range for answers, from ‘not interested’ to ‘very interested’ when asking about your product and its features. Download all the responses.
- Send cold emails. As you don’t know the key people in your area of interest to consult with, send emails to potential customers directly. No spam, individual one-by-one emails offering a meeting to discuss a product or service. Look for specific companies and/or key people – you can use LinkedIn, for example. If there’s no mention of e-mail, Chrome extensions like Hunter, Prospect, Rapportive might help.
- Launch targeted ads. Interested or invested is different. With Google AdWords or Facebook ads, you are able to test if customers would actually be ready to buy something.
Where to start: Startup Idea Matrix
Need to brainstorm some startup ideas? A quick suggestion: Startup idea matrix introduced by Google Play chief, Eric Stromberg. He explains, that it “outlines various consumer markets as well as tactics to bring a product to the market”, and suggests to view it as a starting point for creativity.
As you will see, we can really get inspired by how many empty fields are there, meaning open opportunities. The left column shows industries, and in the upper column, there are possible ways to get into the market (from subscription, rentals, original content, to mobile apps, service, hardware, etc.). Famous products are already there, so you may have a direction of thought.
Where to start II: Create a landing page
No need to spend lots of money on a simple web presence. There are cheap services and even free ones that may suffice. Why launch a web page? Again, this is another way to study the market demand or feedback to your idea.
A page with an individual domain name or the landing page tool URL – it doesn’t matter much at this stage. You can use a landing page to reference information to people, to attract traffic, or just to collect email addresses. The main idea is that you’ll have at least some audience. Check our guide to what is MVP and how to build it to find some tips and tools that might help you create your landing page.
Pitch your idea
Pitching your startup idea differs from just sharing it because now you’re trying to sell it as a business concept. This is the next level of startup validation, so to speak. You get to the audience that might be interested in using your product or investing in it.
And don’t be afraid that someone else is going to steal it. By keeping it secret, how are you going to engage the audience? You may find competitors interested in being partners, and even if someone steals your idea, they won’t have the passion for it like you do.
There are 2 ways of pitching.
#1 Offline. The most effective one and down to its very essence – present your idea face-to-face in 3 to 5-minute pitch. You benefit by getting instant feedback, and expert advice if you’re lucky, invoking a discussion about your idea, brainstorming commercial options. The best outcome would be finding investors for your startup idea.
Startup competition meetings are one of the ways to begin. Check these for example:
- Slush in Finland
- TechCrunch Disrupt in the USA and Europe
- LeWeb in France
- Web Summit in Ireland
- 7Ventures Pitch Day in UK, Germany, and Israel
- Pioneers in Austria
- SXSW Accelerator Pitch in the USA
- MIT Startup Competition in Poland
#2 Online. Faster, flexible and affordable. The options here include: a) B2B marketplaces, b) B2C marketplaces, c) crowdfunding platforms. Marketplaces are essentially online communities with interested participants, where you can present your idea and get not only feedback but direct proposals. Examples: Opporty, BizVibe, Uppler.
With crowdfunding, or fundraising, you share ideas about the early stages, and if it’s decent or innovative, you might actually get money to implement it. You can try some of these crowdfunding sites:
Have most good business ideas already been thought of? Probably. Has each one of them been tried out or successfully carried out? No. Is there the ultimate way to verify if your startup idea already exists? No. It is never going to be easy, but you can always find business opportunities. Start doing something, invest in your idea and you’ll learn much more practical info. Don’t get discouraged if someone has tried a similar startup and failed. That doesn’t mean the idea is bad by default, but perhaps it wasn’t implemented well.