Business Idea Validation for Startups

We all have encountered Aha!  business idea moment in our life. Just having a business Idea is not enough unless and untill we start executing it. Going through a proper business idea validation process is a must exercise for startups to avoid any loss of resource and opportunity.  

We need to accept this fact that many great business ideas are not being executed by potential great startups or entrepreneurs because they have less risk taking appetite. Startup can increase the chases of choosing a good business idea if they validate their business ideas properly. We have identified some key factors startups could consider while choosing a business idea.

In the absence of proper Business Idea validation it is difficult for any startups to take a well informed call about their business venture. It is a known fact that most of the startups dose not get success in their first year of operation. One of the main factor for this is the absence of proper business idea validation at the beginning.

What is business idea validation for startups?

A business idea validation is a process wherein we try to gather all relevant information and validate it from a make sense business perspective. We try to validate each and every factor from ideation till customer consuming the product/service and providing their feedback at the end.

The purpose of the process is to test the business idea in real life scenario in order to refine or make adjustments in the business model.

Why to validate business idea

Why one should invest their time and energy to do business Idea Validation for their Startups. Some of the main reasons are given below;

  • Take a well informed go, no go decision about your idea

  • Business model refinement/ adjustment.

  • Defining value propositions & USP of the product

  • Validating competitiveness of business.

  • Understand the opportunity of scalability

  • Minimising risk in the business to make it a successful model

Seven steps for Idea validation

Startup Business Idea Validation

We have simplified the business idea validation for Startups in 7 simple steps. We have developed few questionnaire which one should work on in each categories;

The questionnaire will not take more than 10 minutes of your time and it will provide a fair idea, how well you are prepared with your present business idea. The questionnaire is designed around the following seven factors;

1. Personal Interest
2. Product / Service
3. Team capability
4. Market Size
5. Target Customers
6. Competition
7. Financial Viability

The business idea validation questionnaire should be able to  identify the gaps in your business model and it should also give you directions where you have to put focus in order to transform your business ideas into a great business venture.

Based on your level of knowledge and preparation you need to answer the questions on a given scale of 1 to 5, 1 being the lowest preparation and 5 means you have mastered the steps.

1. Personal Interest

  • I have the strengths & capability required for the business

  • I am passionate about my business Idea

  • I have developed the prototype of my business Idea

2. Product / Service

  • Business idea solves a really big problem that people will pay for

  • Product / Service Is significantly better than competitors

  • Business idea can be secured with patent / trademark

  • Can be implemented on a reasonable finance

3. Team capability

  • Our promoter shall invest their full time in the business

  • Our team has the capability to execute the business plan

4. Market Size

  • I know the total market size and its' trends for my product

  • I also have clarity on market size we are going to target

  • I have identified the market where we shall test the product

  • We have defined the market barriers for new entrants

  • I also have clarity on market size we are going to target

5. Customer Segmentation

  • We have identified our target customers

  • Know the pains/ desires of our target customers (TG)

  • TG will pay enough to make this a meaningful business

  • TG will buy from us over competitors

6. Competitors Analysis

  • We know our competitors

  • We know our competitiveness

  • We have clearly defined our USP

  • We have developed competitive strategy

7. Financial Viability

  • We know how to make money out of our business

  • We have made the arrangements of money till the business starts making profit

  • We know the revenue sources

  • We know total investment required

  • Know funding requirements from investors

  • Clarity on where to utilise funding money

  • Know the potential profit margin of the business

Success factors for business idea validation

1. Be independent of your business idea

Many times entrepreneurs gets biased with their business ideas and they validate their business idea in their mind. They create the market, customers and competitors in their brain. To make any business idea successful it is necessary to test it in real market and with real customers. The success of business idea validation depends on how critically and thoroughly entrepreneur validates the business idea in real work by separating it from their imaginary mind.

2. Feedback from right target customer

It has been seen that most of startups fail because of the wrong feedback provided by friends & family of entrepreneurs. In order to validate the business idea we need to go out in the market with the prototype of the product / service. Many times at the time of market test, survey or feedback questionnaires does not reflect the real picture. Entrepreneur should think like he is  a real customer. He should think whether he would buy the product / services on that price which he is offering to customers and which he is planning to charge over his competing products in the market.

3. Learn from others mistakes

After analysing the market you may find that you are not alone with the business idea you have. Many times it happens that you find more similar startups in the market in that case it is intelligent to study the other players in the segment and learn from them to avoid the kind of mistakes which they have made.



Business idea validation is one of the most important exercise ,startup or potential entrepreneur can undergo in order to avoid loss of resources and opportunities. Business idea validation should be done in real life scenario with real customers.

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