6 Ways to Validate Your Business Idea

6 Ways to Validate Your Business Idea


This is a guest post from David Fallarme of ReferralCandy

When you’re building a new store, it’s normal to feel a little anxious about whether it's all going to work out. Like most entrepreneurs, you'll probably have a few questions swirling in your head: 

  • Are people really going to buy what I’m going to sell?
  • Am I doing the right thing by starting this business?
  • Will my store still be up and running in six months?

While there’s no way to guaranteeing the success of a new business, there are a lot of things you can do to judge the viability of your new venture. In this post, we’ll take a look at several methods that can help you reduce the mystery around getting your first sales by validating the market prior to launch and building a pre-launch email list.

Validating Market Demand and Building a List

If you want to mitigate your risk of your new business, there are two important things you should do before you launch:

  1. Make sure there are enough people who are willing to buy what you’re going to sell
  2. Make sure they know about you

While there’s no way to guarantee that your store’s launch will be a smash hit, being diligent about these two things will help make sure you’ve got interest and paying customers in your first month online to get help get some traction and momentum going.

By validating that a market exists for what you’re selling, you reduce the risk that you’re selling something nobody will buy. Furthermore, by building a list of potential buyers, you reduce the risk of being desperate for traffic in your first few months.

Let’s take a look at six approaches you can take to help you check the viability of your business idea, along with ideas to help you build a list of customers that are ready to buy when you launch.

1. Browse Amazon Top Sellers

Amazon is an excellent source of information because it gives you information on what’s already selling in the real world. No projections or guesswork around whether it will sell or not; you’ll see it for yourself. Here’s how to use it as a research tool for your new store:

Validating Demand:

Want a quick-and-dirty way to figure out if there’s a market for what you’re selling? Browse Amazon best sellers:

Validating Demand:

The first check you should do is to see that the category exists for your product. Does it have a healthy number of competing brands? Having several companies within an existing market validates that people are spending money on this type of product, and that it’s big enough to support multiple players.

If your product is something fairly new, looking through the list of top sellers can still be useful. Could it enhance the usage of any of the best sellers? Perhaps it could complement or be sold in a bundle together with something listed?

Bonus: Bestseller lists are also a great way to look for new product ideas. This guide from Shopify Nation shows you how to do that on Amazon and eBay. Shopify also has this detailed guide on where to look for product ideas.

Building a List of Customers

Reviews on the bestseller items can also be a starting point for building a list of potential customers.

Some reviewers provide their contact information in their profiles:

Building a List of Customers

Look for reviewers who left poor reviews on a competing product. If your product addresses the reasons for the low score, consider reaching out to the reviewer, either to interview them for insights or to ask for their permission to add them to your pre-launch list.

2. Use Google Trends & Topsy

Aside from looking at the sales of individual products, you can also take a bigger picture view of the product category or industry using Google Trends and Topsy.

Validating Demand

Google Trends is useful for validating that you’re jumping into a stable or growing market. A look at the trends chart for your category can reveal whether the market is shrinking, stable or growing.

For example, here’s the trends chart for organic protein, something which I’m noticing more and more in health food stores:

Validating Demand

Building a List of Customers

Topsy is similar to Google Trends: they both provide an overview of the interest related to a topic. The key distinction is that Topsy monitors social networks, so you can actually talk to the people behind the stats and see what they’re saying about it.

A quick search for “organic protein” reveals a list of people tweeting about it, including many people who are enthusiastic about the product:

Building a List of Customers

  • Can you find anyone who’s passionate about your category?
  • Can you find someone who’s just posted something negative about a competitor?
  • Can you find potential influencers or reviewers that will help you launch your store?

Building relationships with these people can give you access to valuable insights and feedback, while creating a community of supporters before you go live.

3. Estimate Market Size With Facebook Ad Tool

Another way to get a sense of your potential market is to look at your target niche in great detail. Who is your ideal customer? How many of them are out there? Advertising tools, like the one provided by Facebook, are excellent ways to gather estimates that can help you make better decisions.

Validating Demand

Another way to validate your idea is by using the Facebook Ad tool to estimate the size of your target market. This is one level deeper than looking at bestsellers and trends, as you validate by thinking about your target audience and checking whether there are enough people to sell to.

The great thing about the Facebook Ad tool is that you can get very specific and granular. Let’s say you have an idea to sell gymnastics fitness products aimed at female seniors in the Caribbean.

Are there enough 50 year old Caribbean grandmothers who are into gymnastics?

Validating Demand

You can use these numbers to do some back-of-the-envelope math to see whether the market is worth your time. In the case listed, it’s pretty obvious that it would be difficult to build a long terms sustainable business for the target demographic based on the audience size.

Building a List of Customers

You can then use Facebook ads to help you build a list of potential customers. If your target audience is active on Facebook, you can invite them to Like your page, giving you another way to make sure that you’ve got people ready to buy when you launch.

You could also take it one step further and build out an ad campaign complete with landing pages. Check out this quick case study of how Ryan Nystrom validated a product idea using Facebook ads.

4. Get Early Conversion Rate Figures With Landing Pages

While top-down estimation tactics can help you with market estimates, bottom-up tactics help you test your ability at capturing that market. So you’ve got a market -- how well can you reach them, and how well can you convert them? Market testing with conversion rates gives you a picture of how your numbers will work in practice with real people, and if you those numbers are viable.

Validating Demand

Continuing on with the Facebook tactic, in addition to getting people to Like your page, you could also send them to a landing page where you ask them for their email address.

The landing page would have an overview of what you’re selling, along with an invitation to join a waiting list. Use a combination of Facebook ads and Google Adwords to make sure you’re driving the right traffic to your landing page.

This is a popular strategy that can be used to validate almost any product, as long as a significant number of the target market is active online. You can use it to validate demand for goods, services, or even ebooks, as shown below.

Validating Demand

The important part here is to observe your conversion rates, which will give you a feel for whether your marketing costs will scale. Using some estimates, you should be able to see if your model for acquiring customers is sustainable. For example:

Spent $100 in ads → Got 1,000 visitors → Got 50 to give their email (0.05% conversion rate)

Given what you know about your product’s retail price, forecasts for average order value, and the costs to run your store, can you justify continuing to build the business?

Building a List of Customers

The key here is to make sure you have an attractive landing page that allows you to capture the email addresses of interested visitors. The Shopify prelaunch page is perfect for this method.

5. Go Offline To Get Immediate Feedback

With all the tools we have to get near-instant feedback online, it’s easy to forget that people were smartly gathering information about their ventures way before the internet.

Validating Demand

How did people validate their ideas in the old days before landing pages?

Here’s a classic technique that goes back to the days of newspaper classified ads.

Essentially, you put an ad on Craigslist or a local newspaper and measure the response. You list a product for sale -- even if you don’t have it yet, even if you only have a limited quantity. If a sufficient market exists, you should then get people calling or emailing you about the product. If no one contacts you, or the response is lukewarm, then consider going back to the drawing board.

Validating Demand

This tactic goes all the way back to the early days of direct response marketing, where marketers would test different offers in different newspapers in different cities to find the optimal combination of product and price before going nationwide.

It works across many types of industries, as long as your target market can be expected to read the classifieds. See how Noah Kagan used this method to validate a camera rental business.

Building a List of Customers

So what happens if some contacts you, but you don’t actually have any product available? This is a perfect list building opportunity:

“I just sold my last item / I’m all out of stock now, but I will be selling more in the future. I have a connection so I can get these at a great price. Can I contact you when my next shipment comes in?

This is also a perfect way to interview your potential customers and understand what they’re looking for when buying these products -- crucial information that will help your launch marketing.

6. Interview People and Ask Them to Pay

The final technique in this list is takes the most effort, but is also the most powerful: you find people, then get them to pay you money.

Validating Demand

First, you find people in your target market who are willing to talk to you: do this by asking friends of friends, going door to door, stopping people in a shopping mall, or renting out space in a retail location.

Validating Demand

Facebook’s Search comes in really handy here; you can type in “friends who like x” in the search bar and quickly find friends who may be in your target market.

Validating Demand

You’ll pitch them your product, then ask them if they’re interested in giving you money right now. People giving you money is the ultimate validation; parting with cash is much more difficult than giving an email address. This is a situation where you can use body language and social cues to help you sell -- if people aren’t buying it when you’re hand-holding them through the sales process, it’s likely going to be harder to do it online.

Remember, this kind of firsthand research doesn’t always need to be offline; Etsy and Black Milk Clothing developed an intimate knowledge of their customers through Facebook communities and message boards.

Building a List of Customers

Let’s say someone ends up buying from you -- great! You still want to collect their contact info to help you when your store goes live. They’re perfect candidates for up-selling down the road or as the first members of your referral program.

If your product isn’t ready yet, you’ll still ask them for cash, offering the item at a discount. You then collect their info so you can ship them the product when it’s ready.


Starting a business is difficult and can be a little scary. With so many unknowns, validating demand and building a pre-launch list can be critical as it helps ensure sales right from the start and builds initial traction.

If you have any other methods for validating business ideas and building a pre-launch list, please tell us in the comments section below.

About the Author: David Fallarme leads marketing at ReferralCandy, a customer referral platform that helps ecommerce stores increase sales. Learn more about their Shopify app here.

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