How to validate a business idea?

A product or service idea is validated using customer feedback. The problem is customer or user feedback if taken without showing the actual product, or without letting them experience the product first hand, can be misleading.

So instead of just talking to the customers or users about hypothetical features of your proposition, involve some of them right from the time when you are developing a product. Or if you are providing a service, find a customer or a few, who can let you deliver the service to them. Deliver the service to them for free as a sample, if possible. Once you engage the customer in real-time, he or she can provide more realistic feedback on how to fine-tune the product. The customer must be willing to use the product or service to give you feedback in case it serves their needs.

You may put yourself in the shoes of the customer, or involve your family members or friends depending on if the product or service is of some use to them. Engaging the customer or the user in the product development process is the key.

Once the product or service is fine-tuned, try now selling it to some actual customers, again by using your network. The goal again is to find out how a new customer would react to it. Do not begin to mass-market the product or service at this time. If you can sell the product to a few customers, provide them the best customer service possible. So that they may feel comfortable in case if a problem or point of dissatisfaction arises while using the product or service. Take their feedback, and further refine or evolve the product as suggested, if deemed necessary.

Through this iterative process, you will be able to reach a point where the product or service, along with its packaging, and the delivery mechanism will be ready to be mass-marketed.

But before that, you need to work out if you will be able to deliver the product or service in larger quantities, which means you must develop a system (how to) to deliver the right product in the right quantity at the right price to the right customer.

How to fail cheaply, and quickly

The idea is to spend less money, resources, and time to find out if the proposition you have developed will be acceptable to your target audience. First, you need to work out your affordable loss. This is the amount of money, time, and other resources that you are comfortably willing to lose to test your proposition. It should be around 10-20% of your total savings in terms of money, but it would vary from person to person.

Once you have worked out your affordable loss, see what is the minimum viable product or service design you can develop. A minimum viable design is the one that is capable of satisfying the customer needs you are targeting at a very basic level. You can minus the packaging or any aesthetic features if they are not directly meant to serve the customer's needs.

The goal here is to test the concept, and not to sell the product to the customer.