Step 2 of my Top 20 Tips for Small Business Start Ups is one of the most important, and also tempting to skip. We've all done it - you have a brilliant idea that sounds fantastic in your own head, you share it with a few friends and family, and suddenly everyone's a critic and you wish you’d never said anything.
But hey, that's all part of the process. Testing your idea simply means swapping your hopes for evidence, and it's far cheaper to find out what needs tweaking before you've signed a lease, ordered stock or had a logo designed.
The even better news? You can do for free.
Step 1: Write down what you're assuming
Every business idea is built on a pile of assumptions. Before you test anything, write yours down. They might include things like:
• People have this problem and care enough to fix it
• They'll pay roughly this price
• They'll be able to find me
• I can deliver it at a cost that leaves me with a profit
Now circle the one that would hurt most if it turned out to be wrong. That's what you test first.
Step 2: Talk to real potential customers
Friends and family are wonderful - very useful and honest, or so I’ve found! But they're not always your typical customers. So sometimes their views don’t really matter. You need to know if your target market would hand over money for what you’re offering.
Aim for around ten conversations with people who actually fit the customer you described when you worked on your USP in Step 1. Try ex-colleagues, friends of friends, local Facebook groups, LinkedIn contacts or networking events. A 15-minute coffee or phone call is plenty.
A few ground rules:
• Ask about the past, not the future. People are terrible at predicting what they'll do, but they're good at telling you what they've already done.
• Don't pitch. The moment you start selling your idea, people turn polite and stop being honest.
• Listen more than you talk. If you're speaking for more than a third of the time, you need to be quiet!
Some questions to get you started:
1. "Tell me about the last time you [had this problem]. What happened?"
2. "What did you do about it?"
3. "What did that cost you, in money or time?"
4. "What's the most annoying part?"
5. "Who else should I talk to?"
Step 3: Run a quick survey
Once you've had some conversations, a survey helps you check whether what you heard is a pattern or a one-off. Google Forms is free, easy to use and collects the answers straight into a spreadsheet for you.
Keep it short, with five to eight questions, and mix multiple-choice questions with one or two open ones where people can write in their own words. Avoid leading questions like "Wouldn't you love a service that...?" because people will just say yes to be nice. Instead, ask things like "How do you currently solve this?" and "How much do you currently spend on it?".
Share it in relevant local Facebook groups, on LinkedIn and with your network. A few dozen responses from the right people are worth far more than hundreds from the wrong ones.
One quick heads-up: if you're collecting names or email addresses, tell people why you're asking and what you'll do with them. We'll cover this properly in Step 16 (Data Protection Minefields), but it's good practice from day one.
Step 4: Check there's demand online
You can learn a lot without speaking to anyone:
• Google Trends shows you how interest in a search term has changed over time and by location, so you can see whether your idea is growing, fading or seasonal.
• Google's search suggestions. Start typing your idea into the search bar and see what people are actually asking.
• Facebook groups, forums and review sites. Are people already asking for what you plan to offer? What are they complaining about?
• Your competitors. If nobody is doing what you want to do, that might mean you've found a gap, but it might also mean there's no demand. Competitors are often proof that there is a market.
Step 5: Try a mini version of the real thing
Talk is cheap. The strongest evidence you can get is someone actually parting with money, or at least committing in some way. Here are some low-cost ways to test:
• Pre-orders or a waiting list. A simple one-page website or social media post where people can sign up or reserve something.
• A pilot. Offer your service to three customers at a discount of even free in exchange for honest feedback and a testimonial.
• A market stall or pop-up. Brilliant for product businesses, and you get instant reactions face to face.
• A trial run. Deliver a small version of your service for a small fee and see what happens.
One thing to be aware of: once money changes hands, you're trading. You get a tax-free trading allowance of £1,000 a year across all your side income, and above that you'll need to tell HMRC. I'll cover this in detail in the next blog in the series.
Step 6: Do the sums
Lots of ideas are popular but not profitable. Work out roughly:
• What you'll charge
• What it costs you to deliver (materials, time, travel, fees, software)
• What's left over
• How many sales you'd need each month to cover your costs and pay yourself
If the answer is "more customers than exist in my town", better to know now! Start Up Loans offers free business plan, cash flow forecast and personal survival budget templates that make this a lot less painful. We'll go through all of this in later blogs.
Step 7: Decide whether to go, tweak or stop
This is tough. You’re passionate about your idea, but the evidence may not be there to proceed. Decide what "good enough" looks like. For example: "If at least six of my ten interviewees describe this problem without me prompting them, and three say they'd pay my price, I'll go ahead." Your numbers will be different, but write them down so you can't talk yourself round afterwards.
When you read the feedback, remember:
• Look for patterns, not single opinions. One person hating your idea is an opinion. Six people raising the same issue is information.
• Pay more attention to what people do than what they say. "That sounds great!" is lovely to hear, but a pre-order or a sign-up is much stronger evidence.
• "I wouldn't buy that" and "I'd buy that if..." are very different. The second one is a gift, because it tells you what to change.
• Changing direction isn't failure. Plenty of successful businesses look quite different from the first idea. Better a tweak now than a closing-down sale later.
What to take from this
Don't panic, you don't have to do everything today! Start with these:
• ☐ Write down your top four assumptions and circle the riskiest
• ☐ Book in three conversations with people who fit your ideal customer
• ☐ Draft five to eight survey questions in Google Forms
• ☐ Spend 30 minutes on Google Trends and your competitors' reviews
• ☐ Decide what result would make you say "go", "tweak" or "stop"
Want a sounding board?
If you'd like help planning how to test your idea, or what to do with the feedback, book a call with me and we can talk it through.
Next up in the series: Step 3, Don't Give Up the Day Job. Resist the urge to hand in your notice just because your survey results were good!
