The Complete Guide on How to Test Business Ideas
- Last Updated December 22, 2023
Suraj Shrivastava
Chief Link Building Strategist
Chief Link Building Strategist
Do you have a great business idea but aren’t sure if it will actually work? Testing your idea with real potential customers is crucial before investing significant time and money into developing a product or service. This guide will walk you through the top methods for practically and effectively testing business ideas to validate demand and iterate on your concept.
| Testing Method | Speed | Cost | Feedback Type |
| Landing Page | Very Fast | Low | Quantitative |
| Surveys | Fast | Low | Quantitative |
| Interviews | Moderate | Low | Qualitative |
| Focus Groups | Slow | Moderate | Qualitative |
| MVP Testing | Slow | High | Quantitative/Qualitative |
| Pre-Sales | Fast | Low | Quantitative |
| Crowdfunding | Slow | Low | Quantitative |
| Beta Testing | Slow | Low | Qualitative |
| Local Testing | Moderate | Low | Quantitative/Qualitative |
The first step is confirming your business idea solves a real pain point or need for customers. Conduct market research by having conversations with at least 5-10 people in your target audience. Ask them questions to understand their biggest challenges and needs related to the problem you aim to solve. If several people express frustration with the same issue your product addresses, you can confirm demand exists.
You can also create online surveys using free tools like Google Forms or SurveyMonkey. Make sure to get a diverse mix of respondents to ensure your questions resonate with different demographics. The goal is quantifying that enough people actually experience the problem and would benefit from your proposed solution.
Once initial customer discovery has validated the demand, build a minimum viable product (MVP) to test your idea. This is a basic version of your offering with just enough features to fulfill the core promise to customers. The goal of an MVP is gathering feedback, not providing a highly polished product.
Some options for MVPs include offering a concierge service that delivers the benefits manually, creating a video demo of your product, or building a basic prototype. This lets you share something tangible with customers for testing, even if you haven’t built the full product yet. Focus on moving quickly and affordably so you can start getting real-world feedback ASAP.
A landing page is a quick, inexpensive way to concept test your business idea. You can easily create a single webpage that describes your product or service and allows interested visitors to provide their email address or signup. Tools like CartFlows, LeadPages and Instapage make building landing pages simple even if you don’t have coding skills.
If your landing page attracts a high conversion rate of visitors signing up, you’ve validated interest in your offering. Consider running Facebook ads targeted to your customer demographic and analyze signup metrics to quantify demand. Effective landing pages help prove your business concept without needing a fully built product.
While surveys provide quantitative data, having real conversations with customers gives qualitative insights. Interview 5-10 people from your target audience, either over the phone or in-person if possible. Ask for their honest feedback about your MVP or business concept and if they would use/purchase it.
Focus groups with 6-10 participants can also be valuable for group discussions and observing how customers interact with your idea. Send your MVP or prototypes to focus group participants beforehand so you can dive into substantive feedback during the session. Pay close attention to any objections or suggestions for improvement.
Before fully building your product, consider pre-selling it or launching a crowdfunding campaign. This validates that people are willing to put down money sight unseen to receive your product once developed.
You can facilitate pre-orders through your website or landing page. Make sure you collect payment details upfront to confirm buyers are committed. Or use a platform like Kickstarter or Indiegogo to raise initial funding to support building an MVP. Reaching your fundraising goal proves your idea appeals to an existing audience.
Beta testing means giving a small group of customers early access to your product or service in exchange for honest feedback before your official launch. For a mobile app, you may distribute it to testers via the iOS/Android app stores. For a physical product, ship samples to select testers. For a SaaS, provide free accounts.
Plan to incorporate beta tester input into future product iterations. Going through this process helps minimize risk and improve market fit before releasing to a wider audience. Treat your testers like collaborators to build an engaged community of brand advocates.
The success metrics you track should evolve as your business idea gets further developed. For early testing, focus on website traffic, email signup conversion rates, surveys completed, pre-orders placed, crowdfunding raised, and other indicators of interest and demand.
Later with an MVP, analyze usage data, customer feedback scores, reviews, social shares, conversion funnel drop-off rates, and other metrics that capture customer experience. Use analytics platforms to quantify how customers are interacting with your product and identify areas for improvement.
Rather than launching widely from day one, first introduce your product or service in a limited area or to a small niche audience. Start locally in one city or region and expand once you see traction. Or target early adopters who will be especially enthusiastic. This minimizes risk and lets you work out any kinks early on.
You can also release your MVP on a small scale first. For example, restrict signups at the beginning while you perfect your user onboarding experience and support model. Set an initial limit on quantities if selling a physical product. Starting constrained allows you to better manage growth.
Once you’ve run sufficient tests to gather meaningful data, take time to review results across all of your testing channels holistically. Determine whether to proceed forward, make pivots to your idea, or go back to the drawing board.
Not all assumptions will be validated, so be prepared to incorporate learnings with an agile, iterative mindset. Testing business ideas is an ongoing process, not a one-and-done step. But moving forward confidently, knowing your concept resonates with real customers, is incredibly valuable.
Testing your business idea thoroughly before “going all in” will give you the customer insights needed to maximize your probability of success in launching a winning product that creates true value.
Let’s look at an example of a business that pivoted their idea based on insights gathered through testing.
Here are some real world examples of well-known brands that tested and pivoted their business ideas based on customer feedback:
PayPal originally launched as a peer-to-peer payment service called Confinity in 1998, focused on allowing people to beam money between PalmPilot devices. After limited interest, PayPal pivoted to online payments and launched their web-based service allowing users to send money via email. This new focus on e-commerce payments took off much more successfully.
X was initially conceived as an SMS-based platform for groups of friends to share their status updates. After limited traction, the founders opened the network to the public internet rather than just SMS and focused more on news, events, and commentary which proved to be the platform’s “aha moment”.
Groupon first launched as a collective action platform called The Point in 2007, allowing groups of people to band together and use their combined influence for social change. Based on low engagement, Groupon pivoted to become a deals website connecting local merchants to consumers seeking discounts, which skyrocketed its success.
Flickr originally launched in 2004 as a multiplayer online game called Game Neverending. After seeing limited interest in the game itself, Flickr pivoted to becoming a photo sharing community and storage service, which became the foundation of its popularity and acquisition by Yahoo! in 2005.
Nintendo was founded in 1889 selling handmade playing cards. Through several early pivots, they tried adding new products like toys and taxi services before eventually landing on video games in the 1970s, launching classics like Donkey Kong and Mario Bros that defined their brand for generations.
Taking the time to properly test your business idea before fully launching is critical for several important reasons:
Testing minimizes the risks of failure by allowing you to validate your assumptions before investing heavily in product development and marketing. It’s much less costly to pivot early on than after a full launch.
Testing gives you invaluable direct customer feedback to evolve your product-market fit and better meet their needs. This “on the ground” data is key for refining your business model.
You can focus your limited startup resources on the strategies and features that testing proves will be most impactful. Testing helps avoid wasting time and money on ideas that don’t resonate.
Engaging early adopters and testers helps kickstart your community. Their input makes them feel invested in your brand’s success.
Seeing positive metrics and responses to your MVP gives confidence your business idea is viable and worth pursuing further. Testing converts assumptions into facts.
By taking the time upfront to test your idea, you can avoid very costly mistakes down the road. The feedback you collect will be invaluable in shaping the direction of your startup for maximum success and impact.
Validating your business idea by testing it early on with real potential customers is one of the most important things you can do as an entrepreneur. It may require some creativity and bootstrapping, but getting your MVP and concept in front of your target audience will provide invaluable insights.
Be prepared to make pivots to your initial assumptions and ideas based on customer feedback. Iterate rapidly, focus on problems to solve rather than solutions, and keep optimizing your offering for product-market fit. Approaching testing with an open mind and flexible strategy will greatly increase your odds of success.
Creating a simple landing page with a sign-up form is the fastest, most affordable way to gauge initial demand and interest in your idea.
5-10 people from your target audience is generally sufficient for initial MVP testing to gather qualitative feedback.
Tap into your existing network connections, social media, local community groups, Craigslist, or paid services like SurveyMonkey’s survey audience.
Don’t get discouraged. The goal is to refine your concept based on real user perspectives. Use critical feedback to strengthen your business model.
If interest and conversion metrics are very low despite modifications, it may be time for a major pivot. But small tweaks are often all that’s needed to better resonate with your audience.
Suraj Shrivastava at ForgeFusion shares simple, effective ways to grow your business using SEO, content marketing, and AI, learned from helping over 50 companies. When he's not working, he loves teaching others or watching documentaries.
