Business, Startups

Small Business Mistakes – Failure to Validate

This is the second post in my Small Business Mistakes Blog Series. Click here to see the Introductory post with links to more than 40 great small business resources like podcasts, books, sites and more. I will post at least one in the series each week until I get through all 10 on my list – so stick around!


Move Over Passion

Many people romanticize being in business for themselves to such an extent that they lose all common sense and perspective. And with so much in the news about Silicon Valley IPOs and billion-dollar exits it’s not that surprising that people think one BIG idea (and of course a garage or dining room table) is all it takes to be the next Jeff Bezos or Mark Zuckerberg. So, instead of trying to strategically solve a problem for a target market at a price they’ll be willing to pay, these uninformed folks focus only the dream.  Of course, it doesn’t help to constantly hear the feel-good phrase of the decade; “go with your passion and the money will follow”.  Newsflash: passion is, of course, necessary when starting a business (or you’ll die of exhaustion and frustration) but passion alone won’t build a viable business.  Every prospective business owner needs to take a breath after they come up with that great idea (inhale; exhale slowly) and validate the idea with their target market.

What is Validation?

Validation is the process of vetting your idea to be as sure as possible it has the qualities of a viable business; a) the fulfilment of a desire or a need (solve a problem or resolve a “pain point”) that many people have, (b) at a price they are willing to pay.  If you fail to do either, you will not be successful.[1]


Failure to validate causes many small businesses to fail. Let’s look at Tony, for example. Although he’s never played a single hole of golf, he came up with what he thought (and his entire family thought) was a brilliant idea for a product; a pocket-sized leaf blower for golfers to move leaves from the ball’s path.  He paid a company $10,000.00 to make a prototype, paid a manufacturer for an initial order of 1,000 at a cost of $15 each, set his wholesale price at $19 and paid $4,000.00 for a booth at a golf industry show.  And he was stunned when he didn’t get a single order. What went wrong? He didn’t validate his business idea. Are leaves even a problem on a golf course? If so, is it something that causes a problem for enough golfers who are willing to buy a product to deal with it? And if they are willing to buy such a product, what price are they willing to pay? Tony could have likely saved himself at least $30K by making one phone call to a serious golfer.

How Validation Works

Validating your business idea is a bit like using the scientific method of forming a hypothesis, conducting an experiment, and analyzing the data to draw a conclusion.  After validating your business idea, you can also use the validation process for other business decisions that impact your market (e.g.: product add-on, new model, tagline, logo, packaging design, etc.).  There are different methods of validation but the point is to elicit honest and open feedback from your target market and draw your conclusions as to the viability of your business idea…before spending a lot of time and money.  If you ask the right questions or conduct the right experiment, this feedback should enable you to reach a conclusion about your idea, which will inevitably lead to one of three actions; (1) pursue the idea as-is, (2) modify the idea and re-validate or (3) ditch it altogether and come up with a new idea.


Validation Methods[1]

Industry Research –  The very first thing you should do is search the internet to determine whether your business idea or product has already been implemented.  If it has, can you do something slightly different or improve upon it in some way?  Research the industry, vertical markets, ancillary products or businesses, etc. and see if there are different opportunities.  Look for trends in the industry – can you predict something others may not have seen?  Are there regulatory changes that may occur soon? Another new product that may bring about industry changes you could leverage? I cannot stress enough that you should learn absolutely everything you can about the industry you’re thinking about entering. You won’t regret learning too much but you could certainly regret not learning the few facts that would have made an enormous difference in your business.


In-Person Interviews – Most business people agree that face-to-face personal interviews are the very best method for validating your idea.  Skype or video conferencing can also be used, but the point is to see your subject’s expressions and body language and video is not the very best method for this.  If you’re communicating over the phone or by email, some of the commentary can be lost in translation.  First, come up with a list of 20 to 30 potential customers (your target market, not family and friends) to approach for an interview.  Of course, there’s a benefit to interviewing potential customers; they may love your idea and become your very first customers.  Research and think through the questions you’ll ask. They should central in determining the true need for your business or product and the price people will pay.  Keep the interview short (10 minutes max) and be sure to follow-up with a personal handwritten thank you note (they took time out of their busy day for no reason but to help you, so you can take 5 minutes to handwrite a note rather than send a less formal email).  Keep an open mind during these interviews. You’ll do yourself no favors by ignoring feedback, criticisms or relevant questions. Do not try to make this about convincing yourself the idea will work. It’s better to realize at this stage that you need to change course than after you’ve spent months and thousands of dollars on a losing proposition. Additionally, please don’t worry about an interviewee stealing your idea.  Even though they may think it’s a great idea, they’re unlikely to have the time nor the inclination.  Asking a potential client (who’s doing you a favor) to sign a Non-Disclosure Agreement is not something you want to do.

Landing Page and A/B (or “Split”) Testing – If you don’t have the time for personal interviews, or you’ve done the interviews, have good reviews and want to take your validation to the next level, you can do so by using a landing page.  A landing page, used in this context, is just a one-page website that tests the viability of your business idea.  It’s one thing to get positive verbal feedback on your idea but to have real customers sign up for future information, click through to learn more or commit to buy something in the future is much stronger evidence that you have a winner.  A great landing page must have an eye-catching call to action (for signing up or getting more info, etc.) and once activated, you can see how many potential customers you snag (conversion rate). This should provide enough information to determine your next step.  Additionally, you could test two different calls to action, taglines, business names, etc. on the landing page by setting up an “A” landing page with one option and a “B” landing page with the other and measure the conversion rates against one another.[1]  This type of testing is best done at this very early stage without investing a lot of money before making such critical decisions.


Pre-Selling – You’ve heard the old saying, “put your money where your mouth is”. Pre-selling does just that. Of course, this method will only work for certain business ideas, and only if you can reach your target market, but it’s a sure-fire way to validate.  If you can get people to buy your product, a subscription, a coupon, etc. in advance, you can solve a lot of problems up front. As seen in this article by The Teacherpreneur (Jarrod Robinson), you can actually raise the funds needed to build the product, by selling in advance.  But the Teacherpreneur also had a built-in audience with his blog, Podcast, and other endeavors, so this could be a bit more challenging if you have to pay for advertising.  Of course, there’s always Kickstarter.

Minimum Viable Product (MVP) – This term was popularized by Eric Ries who wrote The Lean Startup (a must-read, by the way).  In simple terms, I would say that an MVP is a version of a product built with the least amount of effort, time and money to get it in front of the target market as soon as possible for validation or feedback to enable the builder to modify the product as necessary.  Per Ries’ website, “A core component of Lean Startup methodology is the build-measure-learn feedback loop. The first step is figuring out the problem that needs to be solved and then developing a minimum viable product (MVP) to begin the process of learning as quickly as possible. Once the MVP is established, a startup can work on tuning the engine. This will involve measurement and learning and must include actionable metrics that can demonstrate cause and effect question.”[1]  In his book, Ries explains the way his tech company ended up using this methodology.  But the same principles can be used when starting even the smallest of businesses.  If you want to open a bakery, perhaps you could perfect your cake recipes at local church bazaars or school bake sales and ask for feedback from customers.  Or, if you wanted to be a photographer you could make photos for free and get feedback until you perfected your craft.


Ask for Help

Remember there are vast resources (See the end of post #1 of this series) out there to help you at every stage of the game. You don’t have to do this alone. Your local SCORE chapter or SBA are great resources. You’ll also find most established business owners are happy to answer questions, meet with you, suggest other resources, etc. There are also numerous local business coaches, consultants and advisors, including Concision. Also, see the Google Ventures Guide to Research for some great insight on validation, etc. And please get in touch if you’d like to discuss your business idea (no charge) or need other resources and just don’t know where to start. And keep watching for my 3rd installment in this series very soon.

[1] “Methodology.” The Lean Startup | Methodology. N.p., n.d. Web. 25 Apr. 2017.

[1] See this article for a very in-depth look at using landing pages for validation

[1] This article in Entrepreneur Magazine reveals how 9 different entrepreneurs validated their business

[1] For a great article on business ideas by Paul Graham (co-founder of Y Combinator), see How to Get Startup Ideas.

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