Validating New Business Ideas

So you have a great idea.

Let’s assume that the idea is the basis for a new business concept. To validate or test the feasibility of the new idea, I recommend starting with the customer and working your way back to the company or idea sponsor and ultimately reconciling with the investor.

The acid test is as follows:

1. Why would a customer buy this offering? What are the benefits or what is the value proposition?
2. Who or what is the target market? Be VERY specific.
3. Is the firm or idea sponsor capable of providing and/or making the offering including access to resources such as people, materials, channels of distribution, partners, and technology?
4. Does the offering fit the firm or idea sponsor’s strategy?
5. Will the offering make money? How much and how soon? Will their be enough runway for the idea to thrive?
6. Will the investor/s sleep at night knowing that a decent ROI is possible?

Finally, for a new idea to “have legs” it needs to make life better. Otherwise, why do it?

John Bradley Jackson
Director of the Center for Entrepreneurship
California State University, Fullerton

Published by CSUF Entrepreneurship

We teach, coach and lead the principled, cross-disciplinary practice of entrepreneurship. We believe that, through determined practice, leadership and team work, our students, faculty, clients, volunteers and alums can systematically recombine the new and the old to forge new ventures, create an entrepreneurial culture, and dramatically benefit our community.

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