Startup founders should validate their assumptions by creating and testing a minimum viable product (MVP). This MVP should be tested with potential customers to get feedback and insights on to improve the product. This article guides you on how should the startup founders verify their assumption.
How Do You Identify Assumptions in a Startup?
- Think out of the box. Identify all possible scenarios and as many assumptions as possible.
- Reverse engineering: Examine the design, code, and test cases to identify assumptions.
- Document your assumptions: Owners, dates, impact, associated risk, and other information.
- Accurately address potential risks and potential impacts.
- Report shareholder Information.
Why Is It Crucial to Test Your Assumptions before Launching a Business?
Testing assumptions is critical to a successful startup. Without it, you’ll fly blind and probably crash hard. When companies fail, it’s usually due to a lack of testing.
For example, if you have an idea for a new product or service and you’re not sure if it will actually work, it’s important to test your assumptions before starting your business.
Three reasons why testing is so important for startups.
- Testing reveals risks and opportunities that can be addressed before going to market.
- It helps avoid costly post-launch mistakes.
- Encourages asking the right questions when exploring new opportunities.
What Is the Best Way to Validate Startup Ideas?
Write down the problem, not the specific solution
Problems that you and others frequently encounter should be identified. Note that you are only concentrating on the problem at hand. A concrete solution will be provided later.
Determine if it is a Tier 1 Problem or Not
It’s easy to identify problems. You’re looking to solve is one of the top 3 problems your potential customers are experiencing.
Identify existing solutions
After 20 or more calls, you’ll know how your target customer is currently dealing with their issues. It may refer to a business process, the person you hired to solve your problem, or a specific product or company. It is important to reinforce this concept during the call.
In general, you want to solve problems that already have competitors. If at least one of its competitors is successful, it’s usually big enough with Tier 1 issues (i.e. traction, funding, several years old and growing) We can determine if there is a market.
Be careful if no other company is trying to solve the same problem as you. This usually indicates that there is no market or that the topic is too niche to affect too few people. Selectivity is beneficial but must be balanced against a large market.
Look for pain points in existing solutions
You want to know where the pain is in the way the problem is being solved, regardless of whether they use an existing product or not.
- What do you dislike about the product when using it?
- What is he missing?
- What do they need from this product to make their job easier or faster?
Don’t produce ‘me too’ products.
Comparing your product with others, it has distinct advantages that potential customers can see and understand. And one that can be moved after takeoff.
Look at what they do use if they don’t use a product to solve the issue. Is it a medley of Dropbox, outsourcing, and email?
Verify There is money set aside for a solution
You can see its traction as existing competitors try to solve the same problem.
- Do they grow quickly?
- Do they have a sizeable customer base?
- Did they collect donations? don’t they hire?
- Watch for signs of growth.
This generally indicates that they have a great product, are generating revenue, and are attracting paying customers. That means someone has set aside a budget for a product similar to theirs.
Identify roadmaps based on leads
Assuming you’ve solved the tier 1 problem and enough people are willing to pay, you’re pretty much locked into an audience of 10/20/30/50 people.
If you decide to go ahead with your startup, you’ll have an integrated audience you can consult during product development to discuss features, wireframes, design, and other aspects (Congratulations!). They may even become your first paying customers.
What Are the Five Basic Assumptions?
That your startup is a business:
A business is a recognized entity with a strategy to expand, raise capital and generate a return on investment. It should have a solid business plan and launch calendar. Unfortunately, this is not a startup.
Startups are built through trial and error, and when something goes wrong, the founders are often left with the bill. The thrill of creating your own and the audacious expectation of success outweigh these shortcomings.
Did research to make sure my business would succeed:
Planning and research help us better anticipate and manage risk. Still, nothing is predictable about the future. Because planning is based on assumptions, you should always have a backup plan in place in case your original predictions or plans were wrong.
Knowing your assumptions will help you better understand the risks and vulnerabilities you’re taking. Instead of falling prey to these common misconceptions, use the many resources at your disposal to create a well-researched success plan.
You are aware of your target audience:
Entrepreneurs, no matter how they imagine the number of branding workshops they run their companies with or their ideal clients, inevitably underestimate or overestimate user growth, market viability, and value.
Talk to people in your target market about your product and make adjustments as needed to ensure a consistent understanding of your customers. A customer’s loss of loyalty or a bad experience can happen in a matter of seconds, so always provide the best possible user experience.
That your product and your team look exactly as you envisioned:
Twenty years ago, could you have predicted that your phone would have a touchscreen and be connected to databases all over the world?
We are surrounded by evolving tools in our culture, contradicting our initial predictions of where the tools will lead. So it makes sense for our business and products to evolve, doesn’t it? There’s a reason tests are such a big part of the boot process.
In the best-case scenario, you will have adjusted or improved your way to a much better product than you could have ever hoped to create on your own. Worst-case scenario: your original team burns out or buys into the original pitch but not the process.
If you earn money, you will succeed:
Raising money is an encouraging endorsement for doing what you do. Even if your product works, you have a great user base, and you’ve stopped eating oatmeal with every meal, you still have a long way to go. Only one out of every ten businesses that a company invests in actually succeed.
When VC fundraising is the end goal, companies become focused on raising capital rather than developing quality products. This can lead to overstating capital or raising large sums of money. Instead, think in terms of milestones and work on raising enough money to reach the next milestone.
Wrapping Up
Validating assumptions requires thorough research, experimentation, and data evaluation to ensure the startup is on the right track. Startup founders can make sure their assumptions are well-founded and make necessary changes to their business model accordingly.