The biggest fear entrepreneurs have when working with a new idea is the question “Will it work?”. This fear if unchecked could put a project to a stop if unchecked, but if the object of the fear, poor product-market fit, the entrepreneur could be in for some major disappointment as they launch their product/idea with nobody buying from them.
Being someone from the scientific world before entering the startup scene, I am a big fan of conducting preliminary testing before going “all in” to uncharted territory. Doing business has risks but risks can be mitigated with the right preliminary study. When going into a new niche, it is important to validate if there is a good product-market fit or you may have an ugly baby problem. In this article I’m going to share with you how you can validate a niche with simply $100. To some young entrepreneurs, $100 may be a lot but compared to how much you could lose by jumping into a niche blind, $100 is not a lot. Here are three steps followed by a case study of my $100 waterslide experiment that went viral.
1- Set up a landing page
You’ll be surprised that a website alone is all that you need to validate an idea. Before the internet, entrepreneurs had to conduct preliminary studies with focus groups and popup stores. But the rise of internet has made it easier to get the information you need with simply a website.
If you are pitching a product, I would recommend setting up a popup store using Shopify to get traction. If you’re providing a service, app or experience, you’ll need a website to communicate your idea.
Image Source: Archive.org.
Zappos, the shoe online retail company, started off with as a website with a shopping cart and pictures of a few shoes. Looking to validate their hypothesis that people were willing to buy shoes online if they’re cheaper, they were selling running shoes at prices below the shoe stores. Because they did not have any inventory nor relationship with manufacturers, they had to sell at a loss by going across the street to the shoe store, buy them at full price and ship the shoes to their customers. While some may think this is stupid as you are selling at a loss, successful entrepreneurs could see how they were able to validate an idea that was new for their time. As they were able to validate that selling shoes online at a discount was a sticky idea, they negotiated deals with manufacturers and became the multi million dollar business they are today.
It all happened because of one website.
2- Get the word out there
Contrary to the idea “If you build it, they will come” people will not come if you build something. You do have to push it a bit to give it some momentum. Even if you have the best idea, you do need to tell some people about it.
Asking friends and acquaintances to share can only go so far unless you have something in it for your them (I will share about affiliate marketing in a future article). Unless you have a purple cow idea like a giant waterslide down main street (read below), expect to spend quite a bit of time being your product’s best advocate. Below a list of ways you can get traffic to your landing page, it is recommended that you use multiple avenues to get maximum results. Depending on your product and message, some avenues may not be applicable.
- Facebook – You have to ask a lot of people and join a lot of groups to get the word out
- If you own a Facebook page or have connections with page administrators, you can ask niche groups to make announcements with your link.
- Reddit – make sure you find the right subreddit to post
- Twitter – you have to post a lot
- Offline posters (put them around bus loops and bulletin boards)
3- Set up a few ad campaigns
Sometimes posting it on Reddit, Twitter or Facebook isn’t enough, your idea may need an extra tug to get some initial traction for your preliminary study. Smart marketers set aside a test budget of $50-100 to give it some online impression and see if this idea is feasible. Note that this test budget you should expect to not get back. Think of it as an insurance policy that it’s better to lose $1oo than to lose thousands if you were to go blind and the venture folds months down the road.
I typically let the ad run for a few days to get a good scope of the traction for this idea. There are a few ways you can measure traction:
- Click through rate (CTR)- If people are clicking on your ads and are visiting your landing page, it is one indicator that people are interested. CTR alone isn’t a strong indicator and often requires opt-ins and conversions to validate an idea.
- Opt ins – Having people giving you their email is the next step to validating your idea. It shows that people love your idea and would like to be kept in contact with the project’s development.
- Purchases – (Usually for crowd funding campaigns.) If people really believe in your idea and are willing to pay you, then this is a very good indicator that you have a good product market fit.
Conclusion + Case Study:
Conducting a preliminary study can save you a lot of headache if done properly. With the data collected, it can give you a better feedback of your idea helping you decide should you go all in or should you just move on to other profitable ideas.
Here’s an excerpt from my Main Street Waterslide project back in 2015
Back in 2015, I had this idea of putting on a giant waterslide down mainstreet Vancouver. The idea was actually an adaptation of one that took place in Bristol, UK. While many thought this idea was way out there and didn’t feel it would work (Typical nay sayers) but some people wanted to test it out and put together a landing page (one pager website). The landing page was posted on Reddit and a few other social media sites to probe if there were any interests.
To our surprise, this website went viral and had thousands of visitors. The news picked up on it and we had over 250 opt-ins on the first day and 1000 opt-ins by the end of the week. A shout out was made for volunteers and dozens offered to pitch in and carry out a blueprint from the Bristol slide. Unfortunately the idea had to discontinue due to city hall deciding to block it (upholding Vancouver’s reuptation for being a ‘no fun city’. The excitement from this campaign led to the creation of another waterside that summer at an adjacent municipality, North Vancouver. From this experiment, roughly $50 was spent on a website creation and some ads to get the ball rolling. The other $50 was on refreshment for the first team meeting (if it wasn’t going viral, it would’ve been spent on ads)
Had the organisers jumped in on this blindly building slide parts and renting equipment, they would’ve incurred a huge loss when all the parts were bought and the city blocks them. The other extreme could have happen where they put in 10k to set up a slide only to find out nobody wants a slide. The fact that a preliminary study was conducted allowed the project to get some awareness and feedback before deciding to move forward or not.
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