Editor’s note: This article was first published in April 2014. Justin Jackson’s role at Productpeople.tv is described as it was then; it has changed since.
Have you had an idea? Now you need to work out whether it is viable or has any chance of taking off, something we should do before investing hours and years of effort in it. The truth is that ideas can be analysed in many ways.
A while ago we shared 15 questions to validate a business idea. These days, to look no further, crowdfunding platforms also let us get a sense of whether the market would like our product, although I don’t think that method is 100% reliable.
Justin Jackson, product manager at Productpeople.tv, has a very simple strategy for validating a business idea and making reasonably sure it is a profitable start.
He says his validation takes about 5 minutes, and all you need is a napkin and a pen. If the idea passes this test, we can at least spend more time analysing it and answering other kinds of questions about our future company.
Jackson believes that the best products and services, the biggest ventures, come from connecting our true passion with the solution to a problem we are able to solve. And if we have also experienced that problem first-hand, that extra motivation considerably increases the chances of success.
See also: Business ideas come about in these 3 ways
In other words, if you are going to sell organic food, your chances of success go up when you genuinely love it and are 100% convinced of the importance of eating organic. If, on top of that, your family has suffered illnesses caused by processed food, you may succeed or you may fail, but you will almost certainly be motivated to see it through to the end.
That said, for a business to succeed we need a product, a market and the know-how to bring the product to that market. And that is what we are going to find out on that napkin.
How to validate a business idea on a napkin
If you can’t come up with 5 people, that’s your first red light
Write down the names of 5 people who need your product. You only need 5 people from your circle or among your acquaintances. It sounds very simple, but it is a very effective test. It is not just 5 people who need your product: they must be 5 people who need it and would also be willing to pay for a product that meets that supposed need.
Why validate your idea this way?
This little test measures your own level of connection, or lack of connection, with a real market and its real problems. According to Jackson, an entrepreneur should start out with a network of contacts, and if they cannot find just 5 such people around them, it means either that they have no real contacts or that they do not know the market.
We are not talking about having thousands of contacts on social media. We are talking about knowing just 5 of our potential customers face to face. If we cannot get 5 people we know to be willing to pay for our product, how will we get people we don’t know to do so?
Failing to find these 5 people can only mean one of 2 things
- We are going to fail with our business idea.
- We are going to have to work much harder to get the business off the ground, uphill and into the wind. In other words, we will be starting a business with the failure statistics against us.
Of course, this test is just that: one more probability statistic. But don’t forget that statistics and probability are sometimes more accurate than we think.
Of interest to entrepreneurs: 31 business ideas you can make the most of
Featured image: NASA Armstrong Flight Research Center / NASA/Dennis Taylor, Public domain, via Wikimedia Commons.
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