Chris Mance II - Mental Skills Coach

Validating a business idea is the critical first step to a successful entrepreneurial endeavor.  A step many people skip when they are overcome by the passion or excitement of starting.  I’m guilty of this myself.  I rushed to launch and did not validate my idea in my last startup.  As a result, I spent more time spinning my wheels than serving customers.

I will never make that mistake again.  The cost of perusing a business idea that fails because you can’t reach enough customers, with enough profit margin, in a fast enough time is enormous and supremely painful.  Most decent ideas always sound great when validating against theory.  Anybody can make a spreadsheet of projections that predicts 1 million in revenue and 1000 customers in year 1.  Actually getting to that number is what rarely happens.

Any business I launch going forward will always start with the validation stage instead of the spreadsheet phase.  I will base this validation phase on the practical methods suggested by Eric Ries in his book The Lean Startup.

Using this method, idea validation starts with what’s called the feedback loop and the basic process is as follows:

• Define the most import assumptions about your business model
• Find out what you need to learn to validate those assumptions
• Figure out how you can quantitatively document/measure that learning
• Build a small test product as fast as possible, with as little money and resources as possible to document/measure your learning

Here is a practical example of how to apply this to a fictional business that sells online courses to show teachers how to start and run a profitable summer camp.

Step 1: Start with the most important business assumption you need to validate idea

I can make a profit selling a summer camp startup course using Facebook Ads targeting teachers across the United States.

Step 2: Next validate idea assumption by defining what you need to learn

I need to learn whether or not I can reach enough teachers in the U.S. on Facebook at a cost for me to make this a viable profit making business.

Step 3: Define how you will measure it

I will measure it by running Facebook ads to drive traffic to a landing page that collects payment for the course.  I will measure my cost per click, conversion rate, and cost per conversion

Step 4: Build the test product

I will build a PowerPoint with the contents of my course,  a Facebook ad campaign, and a professional landing page with a single call to action to collect payment for the course.

I will teach the course manually using Zoom Video Conferencing.

Step 5: Validate idea with continuous testing using the feedback loop until you validate or discard the assumption

Continue to test and modify the cost of the course, the Facebook ad, and the landing page to learn how much margin if any I can make targeting teachers on Facebook.  This is a valid assumption if the margin is large enough to make it worth my while. If it’s not back to step 1.

At this time I will not worry so much about the quality of the course and the delivery method. Although, I will do my best in a limited time box to deliver a solid presentation with quality information via video conferencing so I don’t embarrass myself.  Once I validate this first assumption, I will then focus on validating assumptions around the quality of the course and automating delivery.