This guide is purposefully aimed at guiding those who wants to use a proven step-by-step instructional guide for idea generation and validation to build a successful product using a unique field-tested process. 

Using this guide, you will be able to:

  • Find business ideas with the potential to set you apart from the rest.
  • Ways to create value for your customers so they buy, use and become fans of your business.
  • Keep track of market, consumer, competition and business performance.
  • Identify and track emerging trends and ride the wave of success.

We believe that by having a solid product idea and launching a profitable company, you can invest for a secure future, enrol your kids for better education, take your family for a dream vacation, and provide a better lifestyle for them.

Let’s dive in to discover your entrepreneurial potential taking the first step to generate and validate ideas!

Step 1: Find out the business idea to launch

Every business, invention, art, project, story, or movement starts with an idea. Entrepreneurs get ideas to launch their businesses in two ways. In this step-by-step guide, our focus will be on the generation and validation of business ideas; however, the process can also be used for any other type of idea generation and validation.

Ideas mainly originate from two sources:

First, you make an inventory of what you are good at and launch your business, extending your skills and experiences.

Second, you know your customer’s needs and work backwards if they require learning new skills or partnering with/hiring someone else to have the skills.

Let’s take a clue from the legendary investor Warren Buffet’s “25X5 Rule”, which he used for decision-making and investment strategies. I found this rule a simple yet powerful tool for idea generation. 

I have customised and used the 25X5 rule to identify important ideas, prioritise feature releases, and channel resources towards what truly matters to make an idea successful. By focusing on a smaller set of high-priority goals, you can increase your chances of achieving planned results, effectiveness, and overall satisfaction.

Here’s how you can use the 25X5 rule to generate ideas, shortlist the best five ideas and then continue the exercise until you are assured of the idea’s worthiness:

Step One: Use the template and do the exercise to write about 25 things around you that you are most excited about.

Step Two: Rank these items in order of importance and circle the top five.

Step Three: Send the list of selected ideas to your five best friends with the message “Hey! I am starting a new business: which of the products/ideas would you like to invest in and buy when I launch it?

[idea 1]

[idea 2]

[idea 3]

[idea 4]

[idea 5]

Thanks for the help!”

Step four: tick and shortlist the idea for which you have received a maximum positive response. If your friend wishes to invest, discuss the terms.

Do you have an idea? If not, repeat until you get one!

Step 2: Gain Essential Industry Insights of Your Idea

In Step 1 above, you used the process to find and decide on an idea that you want to develop further to launch your business.

Since your goal is to become a profitable business owner, you should be absolutely sure that your idea solves a real problem, has significant market demand, offers a unique value proposition, and is passionate about executing it. In Step 2, let’s conduct further research to gain a deeper understanding of your idea’s worthiness.

Here is how to use online tools to research your business idea online:

1. Gain the insights to make market sense

Whether your idea has the market and the potential for success or not, you need to use online search and keyword tools to discover the keywords and phrases people use to search for the information related to your idea. 

To carry out online searches, you need to use Google Search and Keywordeverywhere effectively, including filters, advanced search options, and evaluating the credibility of information found online. Your goal is to understand the target market, market size, trends, potential level of competition, demand and pricing of existing products and services.

Tools:

Google Search (https://www.google.com/) – Your primary tool at the beginning.

Keywords Everywhere (https://keywordseverywhere.com/) – Adds search volume and related keywords, revealing how people are searching.

2. Digging into the competition

Understanding your competitors is crucial to staying ahead in the business game. But what if you could tap into their customers’ minds? Customer feedback analysis of your competitors is a goldmine of insights you can use to find unmet needs and common complaints that you can emphasise to improve your own offerings and gain a competitive edge.

Tools:

Amazon (https://www.amazon.com/) – Zero in on the 2-3 star reviews, they provide the most balanced feedback.

Twitter (https://twitter.com/) – To find out how people express their desires and frustrations related to the product or service you plan to launch.

Reddit (https://reddit.com/), Subreddit Visualizers (Tools by Andrei Kascha – https://anvaka.github.io/sayit/) and GummySearch (https://gummysearch.com/) – The hub of niche communities to gauge the passion level, language used, common themes and potential customer base revealing what matters to your target audience.

Use the feedback to identify customer pain points your competitors haven’t tackled, analyse strengths and weaknesses to inform your marketing and messaging, and identify any emerging trends and changes in customer sentiment.

As a business owner you must know about the industry, the market and the customers beforehand to determine if the idea is big enough and has a unique advantage. The better your understanding of the ecosystem in which you will operate, the better prepared you will be to gain a competitive advantage in the market.

To gain a deeper understanding of the industry, you should search online, use generative AI, speak with industry experts, and conduct competitive analysis.

Google searches, research reports, news articles, survey reports, market forecasts, conferences and events are among the significant sources that will help you gain a deeper understanding and unique perspectives.

Once you have developed insights, you should question your assumptions to see whether your idea will stay relevant long enough and if you have the skills and advantages over the current practices in the industry.

You can continue pivoting until you are absolutely sure that your idea is relevant to the current context.

Step 3: Carry Out Detailed Competitive Analysis to Discover the Competitive Edge

If done properly, competitive analysis can be a game changer. It can help you discover your competitive edge and navigate the marketplace effectively.

Deep dive into your direct and indirect competitors strengths, weaknesses, opportunities and threats (SWOT analysis) to understand their overall strategy ahd how you can position yourself for success.

At this phase of your idea generation and validation research your aim is to identify product features, functionality, pricing, value proposition and customer targeting.

Evaluate the marketing channels they use, how do they use social media, content marketing, messaging and positioning to reach their target audience.

Monitor industry news, press releases and announcements to understand their future plans.

Tools:

SEMrush (https://semrush.com/): Provides competitive intelligence on website traffic, keywords, and advertising strategies.

Similarweb (https://similarweb.com/): Offers insights into website traffic sources, audience demographics, and competitor websites.

Google Trends (https://trends.google.com/trends) – See visual graphs of search interest

Social Mention: Tracks brand mentions across social media platforms like Twitter, Facebook, Instagram, LinkedIn, etc.

Industry Reports: Market research firms publish reports on specific industries that can provide valuable competitor insights.

Jungle Scout (https://www.junglescout.com/) – Deep dive into Amazon-based competitors

Using the template linked below and step-by-step instructions, you will understand the standard business practices and the economic models your competitor relies on and look outside to learn from other businesses that have successfully taken on incumbents with similar products.

Furthermore, the exercise will help you identify relationships, contacts, product research, similar launches, advertising and marketing planning to launch and grow your business.

Click here to access the competitive analysis template.

 

Step 4: Find the Customers Most Likely Will Buy Your Product and Services

I am glad you have reached this point in your question to solidify the merit of your idea using the idea generation and validation guide. Every business exists to solve customer problems better and more meaningfully.

Taking a cue from the earlier Step 3, you should reach out to your friends who’ve said “YES” to your idea to find their persona, income, social strata, gender, current situations to find your ideal customer segment and to know what’s going through the minds of your target customers.

Here is how to complete the exercise before you move to the next:

  • Segment your customers based on age, gender, income, location, occupation, and family status.
  • Describe their exact demographic data, such as a 25-30-year-old male looking to start a business.
  • Write the exact pain points influencing them to buy your product or service. For example, there is an inability to find the exact steps to launch a business.

To complete part 2 of the exercise, follow the instructions below:

  • Name five customers who match the above segment and demographic and strongly feel the pain points.
  • Explain why you think the customer is an ideal profile.
  • Imagine and write down what they would say when you approach them to buy your product.

Take this exercise seriously unless you are fully confident about discovering the right customer segment and their pain points. It will allow you to target them with marketing, offers, and products, offer the most suitable products, and turn your customers into fans, making it easy to achieve a successful business ownership.

Click here to access the customer discovery and segmentation template.

Step 5: Determine If You Can Create an MVP (Minimum Viable Product) Of Your Product or Service

You are on a special mission to generate idea and validate a revenue generating profitable business. 

Unlike other tools and guidelines, please consider creating an MVP for your product or service.

MVP doesn’t mean you spend lots of money to build your product. Still, by applying minimum cost and effort, you create mockups or prototypes, test marketing copy,  gauge your target customer’s willingness to pay and validate your idea to see how it performs compared to your expectations.

Here are a few ideas for you to consider based on hundreds of companies that build their business and select the most suitable one based on your idea to create MVP:

  • Create a landing page using free tools to explain the concept and collect email addresses from interested customers.
  • Build a minimal functionality prototype to test user feedback before you develop a complete product.
  • Create a high-fidelity mockup to visually demonstrate the value proposition and test user experience without making an actual product.
  • Start a manual, non-scalable process to test the entire product or service journey and gather customer feedback.
  • Create the illusion of a working product by manually fulfilling user experiences behind the scenes, gaining feedback and testing your assumptions.

Keep taking note of your MVP process, customer observations and feedback. Remember, creating an MVP involves finding the smallest thing you can do to test your idea and then going through cycles of testing, receiving feedback, learning, and iterating based on that feedback.

Step 6: Validate With Your Potential Customer and Gather Feedback

If you followed the previous steps of this idea generation and validation step-by-step guide, you would be ready with the customer pain points, potential customer name, and prototype/sample product.

Before you intensify your efforts for the company launch, you should conduct customer validation. It is essential to know whether your customers agree with your assumptions and like how you have considered helping them solve their pain points.

These are the suggested ways to gather feedback from your potential customers:

  • Create targeted surveys with multiple-choice, open-ended, and rating questions to gather quantitative and qualitative data. You can use tools like
  • Google Forms, SurveyMonkey, UserTestings or TypeForm.
  • Conduct in-person or online interviews with target customers to gain deeper insights.
  • Set up a demo booth and invite customers to experience your product. 
  • Send a personalised email to your customers and ask for their feedback.

How to Conduct Customer Interviews:

  • Provide insight into the problems you are going to solve. 
  • Explain real-life situations with facts and stories that your customers can relate to.</li>
  • Learn how they currently solve the stated problem.
  • Ask them what they think about your approach (to solve it).
  • Encourage them to be open and honest with you.
  • Ask them how much they currently pay to solve the issue you are attempting to resolve.
  • How much more or less will they pay if your solution is offered?
  • Find out what happens (to them) if you fail to solve the problem.
  • Based on the above findings, define your product’s features and benefits. The attributes should be strong and unique so that your customers choose your product over your competition. 

 

Step 7: Brainstorm and Reflect with Aim to Build Self-Awareness and Confidence

You have come so far — with the help of idea generation, industry insights, competitive analysis, prototyping and customer validation, you have almost everything that makes a business successful.

However, it would help if you reflected once again, looking at all the documents, ideas, observations, and insights you have gathered while assessing the current state.

True reflection involves self-awareness, taking care of oneself, learning from failures, and developing a deeper understanding of one’s next step.

You should make entrepreneurial decisions based on your ability to solve customers’ problems meaningfully, ensure the investments you need to start and run the business, have a deeper market understanding, and be passionate about making things happen.

Are you really ready for the giant leap of becoming the owner of a successful business?

 

Step 8: Come up with and Finalize Your Company/Product Name

Finding a name for your company or product can be challenging, especially if you want an easy-to-remember, unique, relatable, and powerful name.

A proper name is important as you will use it to incorporate your business and create a brand logo, bank account, and statutory and legal formalities.

Aim for 1-3 syllables for easy recall. Also, think about how the name will complement logos and marketing materials.

Take your time to iterate and refine until you find the perfect name.

You should check your company or product name availability for company registration, domain, and trademark registration.

To find the perfect company and product name, you can use online tools like Namelix, Shopify Business Name Generator, Oberlo Business Name Generator, NameSnack, and many others.

Based on your findings from all of the earlier phases of business building, you should allow your imagination to soar by describing 10, 25, or 50 compelling features and benefits of your product that will entice your customers to choose it over your competition. 

Use the template below to describe the features of your product that will make your offering not only address what the customers want but also prepare your business to deliver a delightful experience. Without limiting your imagination to time, material, resources, money or any other constraints:

Click here to access the Company/Product/Customer Benefits template.

 

Did this idea generation and validation guide help you hit the mark? We want to hear from you! Leave a comment below and tell us what you found most helpful, or if there’s anything you’d like us to cover in more detail. Your feedback helps us create even better content for you in the future.

 

 

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