How to validate your business idea

Lean startup and Lean Canvas


In today’s business landscape, it’s extremely important to validate your idea to ensure that it provides a viable solution to your customers problems. Validation can help to save you time, energy, and money in the long run. Imagine spending $5,000 developing a product for your new business, only to discover that it already exists within the marketplace, or that no one is interested in buying it? Talk about a costly mistake! 


The process of validating your idea helps you to de-risk your idea by putting your customer at the heart. When you understand who the end consumers are and what they want, need or care about, you are no longer “guessing” or assuming that your idea will be successful. And if your idea isn’t viable, you know what adjustments are needed and you can change your idea accordingly. 


How to validate your business idea using the lean canvas model


Here at Startup Gippsland, we encourage our program participants to unearth the assumptions they may have, and validate their idea using two key tools – the lean canvas and lean startup methodology. The lean canvas allows you to map out your idea on a page. In less than 60-mins you can work through the canvas to understand the problem you are trying to solve, how big the problem actually is, how solutions to this problem are currently being met, and the costs associated with developing your idea. Once you’ve articulated your idea, you can then use your canvas to decipher the things that you know and have evidence for, and the things that you’re guessing or assuming. It’s these assumptions that we then take forward and test using the lean startup methodology.


Because we want to de-risk our idea, we want to validate whether the assumptions we’ve unearthed are valid – are they true or not? To do this, we can plan a quick and cheap experiment or test, using a minimum viable product (the scrappiest version of your idea), that allows us to get valuable customer feedback and data. It’s this data that will enable us to validate (or not) our assumptions and improve our idea for our customers. 


While it can seem like you’re stalling by doing this early validation, it will set you up for success in the future. Changing your idea once it’s developed is costly, so don’t be afraid to spend a bit of extra time upfront getting it right. 

Lean Canvas exercise


How to validate your business idea Lean Canvas Methodology Startup Gippsland resources
Startup Gippsland: Lean Canvas exercise


In order to gain the most out of this lean canvas exercise, you must complete the model in order from 1 – 9. 


  1. Identify the problem: What is the problem? How bad is it? Does it really exist? How is the customer’s problem currently being solved? Do you have a deep understanding of your competitors?
  2. Customer segments: Who are you solving the problem for? Who are likely to be your first customers? 
  3. Solution: How can you solve the problem better than anyone else? 
  4. Proposition: What outcome does your product achieve for the customer? What’s the shortest and easiest way you can describe your company?
  5. Channels: How will you get customers to notice and care about your product? 
  6. Revenue streams: What revenue models will you adopt (subscription, licensing, paid per user or direct sales)?
  7. Cost structure: What are the fixed and variable costs of running your business? 
  8. Key metrics: What is the most important customer action? What is the most important success metric? 
  9. Unfair advantage: What advantage do you have that will make you win over others? 


How to test and measure your assumptions in order to validate your idea


Now that you have worked your way through the lean canvas model, you can begin to identify some of the assumptions you may have about your business idea. By testing and proving your assumptions, you can avoid building products that no one actually wants, helping you to save time and money long term. 

Assumption testing should be completed quickly and cheaply. This allows you to pivot or change direction according to customer evidence, so that you end up with a business idea that is viable and fit for market. Assumption testing can be completed at any stage of business, whether you are just starting out, or launching a new product or revenue stream. 


There are 3 types of experiments you can do to validate your idea and your assumptions:


  1. Exploration: This requires you to have a conversation with your potential customers to ask them the important questions you may have about your idea. This could be carried out through an interview or a focus group discussion, either in person, over the phone, or via a video conference. 
  2. Call To Action: This requires you to ask your customer to do something, whether that be to register their details, sign up to a mailing list, or pre order or pay for your product. A call to action shows you that the customer is committed to your product or idea. 
  3. Delivery: This calls for you to deliver an outcome to your customer. Even if what you send your customer isn’t the final, polished end product, it will still provide them with value. 


Through conducting these types of experiments, you can measure the success of your product or idea through your customer’s reactions and direct feedback. This allows you to make adjustments or changes to your idea, which will improve the viability of your product, or give you further proof that your idea will be gladly welcomed and succeed in the marketplace. 

Without validating your idea, you are simply guessing. When it comes to developing a successful business, it’s important to take your time, do your research, and launch a product that your customers will be lining up to get their hands on! 


If you’re interested in learning more about Startup Gippsland and how we can help you build and scale your business, be sure to take a look at our Startup Resources content.


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