Validate Your Business Idea

2. Determine your target market and customer by doing research.

• Do an internet search. This can yield all sorts of results—from showing you related products in the market, to finding out what consumers are looking for, to inspiring you to hone in on what’ll make your product or service great. Plus, you can find industry information online to help define your target market and customer.
• Talk to potential customers about your product or service to determine who may be interested and find out what they’re looking for. If you plan to operate a retail store, check out the neighborhood where you’re thinking about opening and chat with current business owners there.
• Perform keyword searches to get an understanding of how many people are looking for a solution to the problem your business is solving.
• Do some product testing. Get feedback and ideas about how to improve your product or service by trying it out. Consider having potential customers try it, too—that way you’ll be able to gather insights from people who are likely to support your business.

3. Think about how you’ll outshine your competitors.

• Do your competitor research. Do similar businesses exist? If so, what are they offering? Is the market flooded or is there a spot for you and your idea? What are competitors’ websites like? Consider signing up for your competitors’ e-newsletters to keep an eye on what they’re up to and how they market.
• Figure out your competitive advantage. Your advantage could be lower pricing, a product that outperforms existing ones, special features not found elsewhere or something else.
• Conduct a strengths, weaknesses, opportunities and threats (SWOT) analysis. Along with the above, this is your chance to think through how you’ll outshine competitors and see what’s possible for your business—and what you’re up against. Learn more about how to perform a SWOT analysis or download the free SWOT analysis template.
• Make sure you don’t infringe on any patents or other intellectual property (IP). IP includes things like branding and ideas, which are protected by trademarks, copyrights and patents. Learn how IP works and how to protect your business.

4. Do you have the money?

• Figure out your start-up costs. These costs include things like rent deposits, licences, inventory, employee recruitment and training and other miscellaneous things you’ll need to get your business off the ground. See how to determine your start-up costs or try the start-up costs calculator.
• Determine when you’ll turn a profit. Your price should encourage sales while helping you earn a profit after all your overhead costs are paid. Learn how to decide on a pricing strategy.
• Explore your funding options. You’ll likely have to raise funding to start your business — luckily, there are several ways to get the money you need. From bootstrapping to crowdfunding, find a mix of methods that work for you. Explore six ways to finance a new business.

Tip: Determine your start-up costs now with the Start-up Costs Calculator.

5. Are you up for the challenge—both mentally and physically? Starting a business is not for the faint of heart. It involves long hours, financial uncertainties, sacrificing your time and energy, the ability to juggle a lot of tasks and wearing a lot of hats. Check in with yourself to make sure you’re up for it.