Having a killer idea is an important first step in starting a business, but an idea alone doesn’t guarantee success. Before investing significant time or money in bringing your idea to life, you’ll first want to confirm there’s a market for what you’re offering, room to set yourself apart from competitors, and customers who will be eager and ready to buy when you launch.
In other words, is there demand for your idea? Validating a business idea can feel like a Herculean task standing in the way of building your business, but the feedback and insights you’ll gain will strengthen your plan and help you bring a better product to market. Shopify talked with business owners about the strategies they used to validate their business ideas, so you can use them for yourself.
Why should you test your business idea?
The simplest reason to test your business idea is to mitigate risk. There’s always some amount of risk involved in launching a business, but testing business ideas can ensure you take what Briogeo founder Nancy Twine calls “smart risks.”
“I’ve always been taught to take smart risks,” the clean hair care company’s founder told Shopify Masters. “So I knew that if I was going to leave my career in finance to start my own company, I wanted to feel really good about what I was going to embark on.”
As you test your business idea, you’ll discover what does and doesn’t work so you can build the best possible versions of your products. Through the testing process, you may find an even better idea that’s more viable than your original vision.
Benefits of testing new business ideas
The benefits of testing your business idea include:
Attracting investors
Simply put, investors won’t give you money to develop your idea if you haven’t tested it. Testing shows potential investors you’re serious and that your idea can be profitable.
Validation
Testing ideas allows you to move forward with the best possible version of your product and can help you gain confidence about an idea. Before launching Briogeo, for example, Nancy wanted to know whether clean beauty was going to be a short-lived trend or a long-term change for the beauty industry.
Resource allocation
The amount of money you spend creating a test version of your product will help you estimate how much capital you need to fully launch your idea.
Proof of concept
Testing new ideas can involve creating a minimum viable product (MVP)—a bare-bones version of your product that you can show investors and other funders. Whether it’s a basic version of an app or a prototype of a physical product, your MVP will bring your idea to life for everyone involved.
Cost savings
When testing an idea, you can spend less money compared to those who might build out the final version of their product without testing it. If your idea doesn’t work or needs to be tweaked, you’ll save critical resources and valuable time by figuring that out in the testing stage instead of in the product development stage.
Innovation
Testing encourages continuous improvement. Soliciting feedback and making adjustments based on results can help you develop a stronger product and a more competitive business.
How to test a business idea
- Research your target market
- Connect with customers in person
- Gauge interest with presales
- Use data to your advantage
- Create content that resonates
- Have real people demo your product
- Consider crowdfunding
- Crunch the numbers
- Go with a soft launch
Ready to test your business idea? Start with these nine practical tips from successful entrepreneurs:
1. Research your target market
It can be tempting to start in on product design right away, but take the temperature of the market first. Research what’s already available to your target market, or the group of people most likely to buy your product, to help you gauge whether your product resonates with them, estimate the total market size, and get a sense of your potential market share.
Before launching Briogeo, Nancy did a ton of research on the industry. She was thriving as a Wall Street professional and wanted to know what she was getting into before leaving her job.
“I launched a clean beauty product line before the clean beauty movement had really taken off,” she says. “So I did a lot of research to understand was clean beauty just going to be a short-lived trend? Or was it here to stay? And is that how the industry was going to evolve?”
Nancy pored over trend reports and expert insights to help her predict if the industry had real longevity—and if there were customers out there who were going to want what she was selling. “I wanted to make sure that I was launching in an industry that was growing and that had a large addressable market so that I had people to sell my products to,” she says.
It turns out there were. She felt comfortable enough to start building Briogeo, but kept her finance job for almost three years as she did so.
It might be harder to estimate your market share if your idea is in an emerging category. If you can’t find relevant trend reports or industry-specific business news, one quick (and free) way to gauge interest in your idea is to check the search volume trends for related terms on Google Trends.
2. Connect with customers in person
Even if you plan to run your business online, validating your idea with potential customers in person can help you gather useful feedback and allow people to put a face to your brand.
“For me, it’s been really important to test things—but test things in real life, not test things online,” Danielle Close, founder of My Skin Feels, says on Shopify Masters. She spent several years bringing the sustainable beauty brand to pop-ups and markets throughout the United Kingdom. “You could have all these amazing ideas and put it online and expect people to understand the message, but you need to ask them if they understand it.”
While at these in-person markets, Danielle showcased her product and tried different pitches to see what landed with consumers and what didn’t. Sock Candy founder Mary Gui took it a step further, asking her early customers for direct feedback.
“I have also done customer interviews in the past where I will interview a customer face-to-face on Zoom for half an hour, and I find that tremendously helpful,” she says. This is how Mary discovered which sock designs and styles people actually wanted.
You can also get valuable information directly from retailers. When the bike helmet company Thousand was just getting started, founder Gloria Hwang sought feedback from businesses she hoped would stock her helmets by showing up in person.
“I would just go to stores that I liked and just talk to buyers,” she says. “I think as a business owner, it helps you understand direct customer feedback when you're going to consumer-facing events, but also you get a good experience to understand what wholesale customers are looking for too. And that helped us build the business because that helped shape our products.”
3. Gauge interest with presales
Securing preorders can establish customer anticipation, help you predict demand, and generate revenue to help fund your initial production run. It can also confirm that people want what you’re selling before you buy the inventory.
Mike Xhaxho, cofounder of the hydration brand Waterboy, had a feeling that he and his cofounder, Connor Saeli, were on to something when people responded strongly to their videos on TikTok—but they needed to feel confident that attention would convert to actual sales.
“We had an SMS list of about 18,000 to 20,000, so then we knew we had the product market fit because it’s shown by all this inbound interest,” he says. But they were unsure if people were ready to buy or just curious. Launching a presale clarified things pretty quickly. “That’s when we sold what would have been the entire first production run in the first hour.”
4. Use data to your advantage
Data can be a powerful growth tool in any stage of business, but it can be especially helpful to uncover opportunities in the validation stage. Sock Candy used Instagram comments and Shopify Analytics to make sense of early customer behavior and determine which styles were most in demand. Mary quickly learned that one style was majorly outperforming the others.
“When I first launched, I actually didn't have the idea for it to be sheer-socks specific. I just knew that I wanted to make super fashionable socks that were affordable,” she says, adding that she launched with seven cotton styles and three sheer ones. “Immediately, the sheer styles started selling way faster than the cotton styles.”
That’s when Mary started to iterate, focusing on what was in demand and pivoting her designs to more sheer socks.
The sustainable products marketplace Zero Waste Store, which originally launched under the name Earthy Shop, uses Google Ads and search engine optimization (SEO) tools to better understand what their target audience is searching for online—then they design their product line around items that have strong search volume. They used the same hack to discover that the phrase “zero waste store” was being searched for about 10,000 to 15,000 times per month, which inspired them to change their name to capture that traffic.
“People were actively looking for that keyword and variations of that keyword,”says cofounder JJ Follano. “I'm like, ‘I think there's a really strong play here. So why don't we rebrand as Zero Waste Store?’”
The move was worth it—the business went from $6,000 in sales in its first year to $2 million in year two.
5. Create content that resonates
The content you put out—whether that’s digital ads, website copy, or social media posts—should be created intentionally. The goal? To engage your audience and encourage them to take action. High engagement rates can help validate your business idea, provide feedback, and drive sales.
“You just have to think about the customer, what they care about,”says Ryan Bartlett, cofounder of True Classic, whose first product was a better-fitting men’s t-shirt. “Ultimately, the best content early on is always the content that revolves around problem-solving. I was solving three problems, ultimately, and I had to get that across in the early content to sell t-shirts.”
True Classic accomplished this through direct response ads, which nudge viewers to take an immediate, measurable action. A business might use these to inspire customers to click on a link to sign up for emails or claim a discount, for example. This type of advertising is easy to track, allowing you to see how many people are interested enough to opt in.
6. Have real people demo your product
You may know your product inside and out, but having real people interact with it can reveal snags you didn’t know were there—and help you adapt as needed. Julie Carty, the founder behind LatchLight, took this approach when creating the brand’s wearable light for breastfeeding moms. She wanted to be certain the product was the best it could be before launching.
“I got working prototypes made and gave them to new parents and lactation consultants and doulas and new moms and also grandparents and dads; anyone that was going to take care of a baby at night, whether it's breast- or bottle-feeding or diaper changes,” Julie says.
After receiving their feedback, she knew her product was solving a real problem and was ready for market after a final redesign incorporating their responses.
7. Consider crowdfunding
A lot of new businesses have their roots in crowdfunding. A well-executed campaign can raise capital, build brand awareness, and validate whether your product is in demand. This was a game changer for David Levy, who founded Bola Grills. Before launching, he dipped his toes in the water with an Indiegogo campaign that brought in about $22,000 in just 30 days. He also sold 94 grills. Though, he stresses that a successful campaign takes effort.
“There is a lot of work that goes into crowdfunding,” David says. “You basically have to sell your product and sell yourself. So people that find you, they know that they're buying an idea, but they also have to be able to trust you enough to be able to purchase this product and believe that they're actually going to get it.”
Crafting a clear pitch to explain the problem you’re solving, how your product differs from competitors, and who you are can help your idea succeed on crowdfunding platforms.
Founder Jing Gao also used crowdfunding to test Fly by Jing’s first product, the Sichuan chili crisp. She told Shopify Masters that crowdfunding is a “really time-consuming process, but it is rewarding.” Unlike other forms of funding, “at the end of it, you get your base of potential future customers.”
As a bonus, crowdfunders “are actually quite understanding of any delays and mishaps that happen when you are first starting out,” Jing says. “It’s good practice before you actually start your Shopify site.”
8. Crunch the numbers
Once you’ve found your product’s market fit through research, interviewed your target market, and tested a version of your product, it’s time to model what you need to start producing. “Then the question is, well, can you scale it?” says Todd Masonis, cofounder of Dandelion Chocolate. “If you have a small facility and small-scale machinery, maybe you can only get to a certain size [of business].”
The work you’ve done to refine your product should enable you to determine what you need to satisfy increased demand and generate more revenue to become a profitable business.
Once you’ve figured out how to scale your product, the next question is one of unit economics. “If you’re making all of this chocolate, but you’re losing money on every bar that you make, then that’s going to be a challenge,” Todd says.
9. Go with a soft launch
If you’re still finding your footing, a soft launch can allow you to gather feedback and fine-tune things. This involves selling your product to a limited group of people to see how it’s received—and if there’s indeed a market for it. That worked for Claudia Snoh, cofounder of the premium coffee concentrate brand Kloo. They used a soft launch to test things out among friends and family, as well as folks who came across the brand on a review platform or through word of mouth.
“Toward the end of the soft launch, we also did a pretty extensive survey as well,” Claudia says. “From there, we really learned a ton about who our target customer is and their behavior, and we did actually end up making big adjustments to our branding, packaging, and pricing.”
When done right, a soft launch can prevent you from entering the market before really understanding your target audience.
Test business idea FAQ
Can you get paid for business ideas?
If you have an idea for a product or business but don’t want to launch the business yourself, you can try selling your ideas to larger companies as part of a licensing agreement.
How do you know if a business idea is profitable?
The only way to know if a business idea is profitable is to test it. Start by researching your target market. If you have a product-market fit, make a test version of your product and start soliciting feedback from your target audience.
How can you refine your business idea?
To refine your business idea, solicit feedback from your target market via focus groups, interviews, and surveys. If you have an early version of a product, invite your target audience to test it out, and use their feedback to further refine your product.
Are there any online tools or resources to assist with business idea testing?
The US Small Business Administration offers a variety of resources for aspiring entrepreneurs, including an online learning center and a directory of local Small Business Development Centers. Many local public libraries also offer business resources, such as access to trend reports. You can create online surveys for your target market using tools such as Google Forms and SurveyMonkey and search volume trends for your idea using Google Trends.
