Most businesses fail in the first year.

And the reason for this is because many people start a business without doing proper market research or validation of their idea. Is your business idea actually good? Does it solve a real need in the market? Or do you just think it’s good?

Don’t create a business around something you 'think' you are good at or something you ‘think’ people need.

Make sure you have validated your business idea in the market before you spend time or money creating it. In this post I share some ideas for how to do that and explain how I do this myself using my ‘pre-sell strategy’.

What is external validation?

External validation is the process of determining whether there is a need for your product or service in the market.

It’s also the process of ensuring that you are the right person, with the right set of skills, to create and deliver this product and service. It’s about finding out whether the product or service you want to create is something that people actually want to spend money on.

External validation is really important before you spend time or money on a new project or idea.

When creating a business or a new product or service what we are essentially trying to do is to solve people’s problems with our solution. But what many people do is create solutions to problems that don’t really exist or they create the wrong solution to a problem people have. They then use significant resources of time and money to develop a solution only to find that nobody purchases it.

So spending time validating your idea before creating it will help you determine whether or not the idea you have is really something people want (and are willing to pay for!) or whether it’s just something you think people want.

How to validate your business idea

The process of validating your idea doesn’t have to be all that complicated.

Ideally you want 3-5 pieces of 'evidence' to show you aren't the only one who thinks you have a good idea.

Here are some questions I ask myself when I have a new business idea so I can determine whether the product/service/business is a good idea and whether I am the right person to create it:

Do I understand the topic? For example have I studied in the area, done well in a course, consumed a lot of content about it, taught myself how to do it?
Do people ask to 'pick my brain' about the specific topic? Am I an expert in this area?
Have I worked professionally in the area already and had good feedback?
Have I been asked by friends/family for help with this?
Can I be better than others at this?

More often than not a good business idea is born out of a solution to a problem you’re having yourself or have had in the past. Perhaps you’ve now solved a problem and you can teach others how to solve it as well.

I also think about a few other questions when I’m contemplating a new business idea:

What is the market size for this product/service? Are there enough people who have the problem I am creating a solution for to build a profitable business around it?
How complex is this idea? What resources, skills, knowledge are going to be needed to get this to the market? Do I have those resources, skills and knowledge? If not, where will I find them?
How does my product/service differ to what is already in the market? What makes it better or different?
Who are the competitors in the space? How many are there? What do they charge? How can I improve on what they are already doing? (by the way competition isn’t a bad thing as it means there is actually a market for your problem - but you do need to be clear on how you can bring something different to the solution if there are already people successfully solving it)
What is the path to revenue with this product? How quickly can I monitize it and how many users/clients/customers will I need for it to be profitable?
Does it sound like a fun thing to create? (for me this is critical as if I am working for myself then I only want to be doing things that I enjoy and feel passionate about).
Who is my ideal client/customer? Can I easily find them? Do I understand them?
What value does my product/service idea have for this ideal client/customer? Do they really need it or do I just think they need it?

My Pre-Sell Strategy

If I’ve been through the process above and worked through the questions and still think that my business idea has merit then the best way I know to externally validate the idea in the market is to pre-sell it.

These days I run an online courses business for designers that makes multiple 7 figures per year. And before I spend time making any of my courses I pre-sell the course in my community and see what happens. If people purchase then I know it’s something that is wanted and needed (and I then build it) and if it doesn’t sell then I know it’s not something that people want or need so don’t spend any time working on it and move on to my next idea. This simple method has saved my so much time and money creating things that only I thought were real problems.

And you don’t need a huge community for the pre-sell strategy to work.

Even with only a few hundred Instagram followers you can start to gauge whether you have an idea that solves a need people really have. As your community grows you’ll find that people start to tell you what they want you to create for them and so the pre-sell strategy isn’t as important. But in the beginning this is the least risky way to launch a new product or service.

Here’s a quick overview of how I validated my ideas when I was first starting my online courses business.

I would post something on my Instagram page or Instagram stories about the new product I was creating (e.g. a new online course idea) and I would ask people whether this idea was something that interested them.
I asked them to contact me via DM if it was (note I said DM here - not the comments of the post - as this meant nobody would ever know if I didn’t get any responses. If you ask for them to post in the comments you risk having nobody say anything and this can be a bit embarrassing! Getting people to contact you in the DMs also allows you to start to build a relationship with them).
If people start to DM that they are interested this is only the first step. Until people pay real money you still don’t have good validation of your idea. Lots of people will say a business idea is good, far less will pay money for it.
So if people are expressing interest in my DMs then the next part of the process is to build out a sales page for the product. I would include an outline of what it’s about (e.g. if it’s a course then I would include info with the outline of the course modules and info about what’s included). This sales page needs to be good - so spend time on creating this and making sure you get your messaging right with it.
The sales page would also have a working sales cart button - i.e. where people pay real money and purchase the product!
During pre-sale I always heavily discount the new product and be clear that it is a pre-sale period. I am also clear about when I will be delivering the product and make sure I really can fulfil the promise on that delivery date.
I am also clear that by signing up in advance they are getting a big discount and that once the product officially launches the price will be going up. This helps to create a sense of urgency and encourages early adopters to jump on board.
I always make the delivery date for pre-sale within a few weeks of the date of pre-sale. I would say no more than a month in advance. If you do longer than that people feel it’s too far out and will just wait and see what happens with it first.
Once the sales page is ready I promote this to my community. Even when I only had a small community I would do it this way.
This is where the true validation now comes in - do people start to purchase the product?
I would decide in advance on the minimum number of sales I would take in order to actually create the product - e.g. 10 course sales and I will make the course. This number is completely up to you but think about what sort of initial sales would make it worth your time to create the product - how many users would you need for it to be financially viable? Also have a stretch goal - i.e. what would be your ideal number for your pre-sale, how many would you love to get?
Once I hit that minimum number of sales I then get to work on creating the product to the highest standard I possibly can and then make sure I deliver it by the date I have said I will deliver it by.
If I don’t hit the number (this hasn’t happened for me luckily) then I would refund anyone who had purchased and let them know that we didn’t have enough purchases to make the product financially viable.
Remember - these people are your early adopters of the product so once you launch make sure you create the best ever client experience and over deliver on everything you promised to do.
The happier you can make your initial cohort of customers the more they will talk about with their friends, family and colleagues, which means your product/service will now start to take off.

This pre-sell strategy works and is the best method I know, by far, of validating a business idea.

When I first did this strategy for the first ever version of my SketchUp course I initially had a goal of having 20 people sign up for the course. I sold the first version of the course for $297 (it’s now nearly $1,000).

In the end my first pre-sale launch resulted in just over 100 students in the first cohort of the course and made around $30,000. This was officially validation that people wanted and needed the product!

This course has since gone on to make millions of dollars and we’ve had nearly 4,000 students come through it (at the time of writing this post). So trust me when I tell you that the pre-sell strategy works!

But just a word of warning about this strategy. Creating a full online course (or whatever your product/service idea is) to an exceptionally high standard in a very short space of time is NOT easy to do. So before you launch in to this strategy make sure you really do have the skills to be able to deliver what you say you are going to deliver to a high standard. And be prepared for a few weeks of exceptionally hard work.

Pre-validation is of course only part of how to build a successful product and business. In my opinion the most important part is executing on the product and creating the best possible client experience you can. This is how a truely successful product grows. But that’s the topic for a whole other blog post :)

So please don’t launch in to a new business idea or product idea without validating it first. And if you really think you’ve got a great idea then give the pre-sale strategy a go. Trust me, it works!

With this strategy you’ll either know you’ve got a great product or you’ll know that you don’t (in which case you will have saved yourself lots of time and money creating something nobody wants). So it’s a win/win either way.

Business Courses and Resources for Designers and Architects

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Enjoy the rest of your day!

Clare x

Dr Clare Le Roy