While the process of building a business takes time and money, testing business ideas can be fast and relatively easy.

  • Create a video showing what you will offer, explaining the back story and benefits. Use Indiegogo.
  • Use fake products and dummy data. Don’t invest in any inventory yet.
  • Send this to target customers and post on sites like Reddit.
  • Use Adwords marketing to bring more traffic to the videos.
  • Only after the message has struck a cord with people do you proceed to build a business.

Indiegogo and other crowdfunding sites are ideal testing grounds for B2C businesses. While Kickstarter is awesome, it’s only for funding creative endeavors (not businesses). You’d be a fool not to invest in this kind of marketing to launch your product or service. If the campaign fails, then you know that your offer isn’t compelling enough yet, or that you aren’t meeting a real need.  You can abort the project or try again with a similar, better campaign.

For low-margin consumer products, you’ll need to prove that thousands of people are interested in your products. If you cannot do that through one of these campaigns, you probably shouldn’t create the product.

Here’s how you should NOT launch your business or product:

Nonetheless, this is what many entrepreneurs are still doing:

  • Quit the day job
  • Send out surveys to measure demand
  • Hire a marketing firm or designer friend to create the brand
  • Start developing the product
  • Build the website
  • Start advertising the product with a launch date in mind
  • Invest in inventory, set up distribution channels
  • Launch with a party and press releases
  • Experiment with marketing channels

This “waterfall” method is a recipe for disaster. The waterfall method originates in the production of physical products. But in the software world (and increasingly in the world of physical products), the waterfall method leads to overspending on marketing, over-investment in inventory, and more often than not, failed businesses.

Best practices for creating startups do exist.

This is one of many potential best practice for testing business ideas. You’ll find more in these two books, which I recommend for any entrepreneur looking to start a new product or service:

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