8 steps to validate a small business idea

The statistic hurts. 35% fail because they don't understand market needs.

A lot of founders out there believed they had a great idea. And unfortunately, would-be customers didn't agree.

So this startup idea generator is just the first step. The real work is validating your idea. Here's how.

1. Do your discovery

Is it a great idea? How can you know?

Ignore your friends. Ignore your family. Ignore your uncle Algernon whose friend Chet had a successful business once.

Listen to your potential members. Listen to your customers.

Here's the trick. Find 15-20 of your potential customers or members to interview.

Take the time to ask each one questions. Open-ended. No agenda.

Actually listen.

What are their pain points? What do they need? How much can they spend? Do they value the solution? Can you provide the solution?

This should be the first step to validating any small business idea.

2. Presell something

It doesn't work anytime. Not every product can be presold.

But if you can presell SOMETHING, consider it!

Anybody can say, "Yeah, I love your business idea!" But will they buy it?

Whipping out a credit card is where the rubber hits the road. And if you can presell enough, you've validated your idea. Simple as that.

3. Create an MVP

A Minimum Viable Product (MVP) is the simplest thing you can build and sell. "Fail fast" is a connected concept from the startup world.

Get a product up and viable, then get it in front of people.

Don't overthink it. Don't spend months perfecting. Forget the business cards and car decals (unless that's the business of course).

And just ship something!

If your product or service isn't going to work, at least you'll know sooner rather than later.

4. Understand your UVP

Another acronym. Your Unique Value Proposition.

If there are 10 pizza restaurants in your small town and you're opening an 11th, what sets yours apart? Seriously?

5. Analyze the business model

Stop and carefully think through your business model. It's easy to get emotional about a business and go all in without testing.

For example, what if your business ideas was, "I'm going to bake bespoke birthday cakes for kids."

You'll have to 1. Find clients, 2. Buy ingredients, 3. Bake and decorate, 4. Deliver(?). What can you charge for the cake? Is it going to be worth it?

If you can charge $50 and it takes you $15 of ingredients and 5 hours of work, is that worth it?

Ask these hard questions.

6. Think about scale

Some small businesses are lucrative enough to make great money without serious scale. But it's not always the case. (See the cake example above).

It's worth thinking about this.

• Can you separate time from money? (e.g. with products or licensing)


• Could you hire people and expand? (If only YOU are qualified to do the work, it's tough.)


• Can you set up recurring revenue?

7. Analyze your competition

Take note of the existing businesses in your space. Study them. Book a call. Drop by. Talk to them.

You might even find (depending on your niche) that some don't see you as a threat.

The carpenter who is 2 years behind on work and estimates might not be threatened that you're starting a similar business. Who knows? They might even throw work your way.

But even if you don't talk to them, do all you can to study them to check the viability of your business.

• Are they thriving? Are they busy?


• Do they have good Google reviews?


• What do people complain about in reviews?


• What do people love?


• Are they growing?


• What would you do differently?

8. Learn your history

It started as an innocent Facebook post.

"I just moved to town. There's no dry cleaner here. I'm going to start the business."

Then the peanut gallery chipped in.

"Five people have tried. They've all closed."

"I used to own one. I'll tell you why it's a TERRIBLE idea."

Now, is it possible that you could do it differently, better, or that the market is ready for it?

Maybe!

But it's at least worth doing the research to find out why the others failed.

In the end

There's no perfect way to know if a business will work. Sometimes you've got to make the leap. And some would-be business owners spend so much time humming and hawing they never get started.

So the goal of this list isn't to scare you into analysis paralysis.

It's to help you test your ideas and get ready to soar!

How about a digital small business?

Businesses of all types can be incredible. So let's talk about one more option you should consider: a digital small business.

Here are some reasons why digital small businesses rock.

1. Easy to start

With incredible software for digital business, starting a thriving small business can be as little as a few minutes of set up. This sounds too good to be true, of course. And let's be honest, not everyone who creates something online will thrive.

Many won't.

But some will.

And everyone who has a thriving digital business started somewhere.

• It's easy to test and get a Minimum Viable Product up.


• It's easy to launch marketing.


• It's easy to create offers and collect money.

2. Limitless scale

Digital businesses have almost limitless scale potential. Say you're creating a pre-recorded course. It makes little difference whether you offer it to 10 people or 1,000 people or 1 million.

Yet the work it takes to grow a business like this does not expand at the same rate.

Other than customer service or potential live experiences, you can scale it forever.

3. Incredible niche

Starting a course teaching bird feeder design in your small down might have limits. Take the same course online, and you can connect thousands of people around the world who care about something.

When you can reach around the globe to find people in your niche, it creates amazing possibilities.

We've seen successful memberships and courses built around:

• Learning to play metal guitar


• Growing a food photography business


• New methods for horse training

4. Amazing flexibility

Whether you want to work from a beach or stay home with your kids, digital businesses have the flexibility to take almost anywhere. In many cases, you just need a laptop or a phone.

5. Low overhead

The software you need to run digital businesses is usually affordable. Compare this to a bricks-and-mortar business which might require a storefront, permits, inspections, inventory, and staff.

How this generator works

This generator uses AI and some pre-programmed magic to spit out endless small business ideas. Awesome? Yes!

You can use it as many times as you want. Try different combos of words. Try different skills. There's something here for everyone!

Remember, no idea is perfect. Always do your homework and validate before going all-in on a small business idea.