How To Validate Your Business Idea This Weekend

0:00No child deserves to go hungry, especially at school. But right now, some politicians are cutting funding to programs that help kids access free meals at school while handing out tax breaks to billionaires. Hungry kids can't focus and learn. The National Education Association is made up of 3 million educators and allies across the country dedicated to making sure every child has the support they need to thrive in the classroom. Help the NEA keep hungry kids fed at school. Learn more at nea.org slash nutrition.

0:57to learn more. Consumer Reports does not endorse or promote any product. In the past 20 years, I've built two businesses from scratch, sold one of them, and coached thousands of entrepreneurs in the process of starting their own. And I've seen the same, the same mistake over and over again. People spending months, sometimes years, building something nobody asked for, something that nobody wants. They spend time on perfecting the product. They build the website. They design the logo. They set up the social media accounts, they launch and nobody buys. Not because the idea is bad, because they never validated their business idea before they built it.

1:36Here's the truth that changed how I build businesses forever. You don't know what the market wants until you put it in front of them. And you don't need months to know if your idea is going to work or not. You actually just need a weekend, a couple of days. In this episode, I'm going to give you the exact five-step validation formula I use to test my business ideas, projects, whatever I launch so that I don't waste time, money, and don't have a bunch of headaches. If your idea passes all five of these steps, you have a real business worth building. And if it doesn't, you just saved yourself months and a ton of money in the process.

2:14So listen up, pay attention, and thank me later. Let's get into it.

2:23Welcome back to the$100 MBA show. I'm your host, Omar Zinhome, where I deliver practical business lessons three times a week, Monday, Wednesday, and Friday, to help you start, grow, and scale your business. I got a quick favor to ask. If this show has helped you in any way, leave me a quick review. You could do so wherever you listen to podcasts. This helps me and my team reach even more people who need the same no-fluff practical business advice that you're getting from this show. It only takes a few seconds, but it makes a huge difference. Thanks for being a part of our journey to help others on their journey.

3:00Step one, identify the painful problem. Every successful business is built on a painful problem. Not an inconvenience, not something people occasionally think about, but a problem that costs people time, money, peace of mind on a regular basis. This is the type of problem you want to build a business around. The more painful the problem, the easier it is to sell. Let me say that again. The more painful the problem you're trying to solve, the easier it will be to sell the solution because people are starving for this problem to be solved. Here's how to find out if your idea is solving a genuine painful problem.

3:38Go to Reddit. I know it sounds simple, but I'm telling you, it's a goldmine because people go to Reddit to complain, to ask questions, to vent. and this is a place where you can find out where your audience is suffering. What are the areas that they need to have solved in their life, in their business? And then you can come up with solutions and sell them on these things. Now, not them in particular, but you can come up with a solution to sell people like them that have those problems. Literally go into the threads, read what your audience is complaining about. So say, for example, you are serving mothers that are working and have young children.

4:11So say that's your audience, that's your demographic. Go to the threads that pertain to those people. Look for the questions that come up over and over again. Look for the posts that have hundreds, even thousands of comments because they are deeply frustrated about something that they're complaining about. These reoccurring complaints are your market signal. If people are venting about the problem that you are solving, this is a good sign. If you don't hear anything about the problem you're trying to solve, that's a sign you should not be solving this problem because it's not a painful problem, not painful enough for people to complain about it publicly.

4:46I'm going to give you a couple of exercises you could do this week that's going to really allow you to identify if the problem you're solving is a real problem. Number one, one option is, like I said, go to Reddit in three communities that relate to your idea, write down five of the most common complaints. If your idea solves one of them, move on to step two, step two, which we're going to cover in a second. Another exercise you could look at if you are not a big fan of Reddit or you get lost in the threads, go to Amazon.com. Go to Amazon and search the books on the topic that you cover. So say, for example, your specialty is weight loss.

5:21Go to all the books that deal with weight loss and filter for the three-star reviews. Why? Because five-star reviews are going to be glowing and we're going to love the book. One-star reviews often are biased or maybe not really fair. Three-star reviews, I would say three and two, people will share, hey, this is what I loved about this book, but I wish this book talked about this, or I still have this problem, or I wish it provided some solutions on this area. These are really great pieces of information that you can figure out, hey, are people complaining about the things I'm trying to solve?

5:53So two options for the exercise, go to Reddit or go to Amazon reviews. Let's move on to step two. Find out if people are already paying for a solution. This is huge because if people are already attempting to solve this problem, this means they are proving with their dollar that they're serious about finding a solution. Even if the solution is not completely solving the problem, they're just so desperate they'll try anything. Here's a quick tip. Go to Etsy, for example, and search for products in your category. Sort by bestsellers. Look at what is selling and how many sales it has. How many people have bought this product?

6:28If you find products with hundreds of thousands of sales, you have just confirmed that people are serious. They are willing to pay money for this product. People are actively spending money to find a solution to a problem. Now, maybe the product is mediocre. Maybe the product doesn't really solve the problem. Maybe you can do a much better job at solving this problem. Great, but it's still proving that people are doing something. They're trying to spend money. They're throwing money at the problem, hoping that there is a solution here. Now, in my own case, when I was building my software company, Webinar Ninja, people were so happy to give me money at just hoping that I can solve some of their webinar problems because running webinars back in 2014, 15, 16 was a big pain in the butt.

7:11OK, you had to Frankenstein a bunch of software together, marketing software, email marketing software, video streaming software all together to hopefully make this all work together and nothing breaks in the whole process. So people are willing to pay me up front for the promise of a solution. We pre-sold Webinar Ninja to our first 250 beta members. People gave me money without any software at hand. They were promised it in four months. So this was a clear signal for me that, hey, I'm really solving a painful problem. People are willing to just give me money on the hope that I can solve the problem.

7:43By the way, you don't have to search for products that are exactly like yours, right? You can find other products that are similar. Say, for example, you have a coaching program where you help people in a group coaching format to get their finances in order. Now, you don't sell courses, you sell coaching. But you can go to Udemy and find out what courses are selling on Udemy. Are personal finance courses selling? Are people buying this course? Are people spending good money? Or are they only spending like, you know,$50 on a course? Or are they willing to spend$300? So it gives you an indication if there's money in this market.

8:15So here's your exercise that you could do so you can see if you can pass step two of this process. Find three products or services that are already being sold to address the problem that you are trying to solve. If they exist, if these products exist in the world and they are selling, people are making money with these products. You have market validation. You can move on to step three. Now, before I move on to step three, I do want to say one thing. A lot of people say, well, if I find other products being sold, doesn't that mean there's competition? Doesn't mean there's going to be harder for me to sell?

8:45No, it doesn't mean that. It means that you have validated that people are willing to spend money on that. The opposite is actually much harder. If you're trying to create a new product that no one's ever heard of or don't really understand, it's very, very hard for you to survive in the marketplace because you have to convince people of a new concept. A good example of this is Airbnb. When A came out, no one had any idea what this thing is. They're like, what? People are going to live in my house and I'm just going to let them sleep there and they're going to be right next to me? This is weird.

9:13I'm going to sleep in a stranger's house? It's just a weird concept. And in the beginning, Airbnb, their MVP product, they didn't even have a way to transact, meaning that people had no way to pay for the stay. So people actually paid in cash to the host directly. But the point here I'm trying to make here is that Airbnb, the only reason why they survived is because they were venture backed. They had enough money to just teach people about the concept of Airbnb. It took nearly a decade before they started to get traction. So you don't have a decade as a bootstrap business, as somebody who doesn't have, you know, hundreds of millions of dollars in funding.

9:43So what I'm asking you to do is to go to a validated market and just come up with a better solution to the same problem that people are trying to solve. Running a business means you're always reachable until you're not. And the moment you miss that call, that text, that follow-up, a competitor is the one that picks it up. That's why today's episode is brought to you by Quo, spelled Q-U-O, the business phone system built so you never miss an opportunity. With Quo, all your calls, texts, and voicemails live in one place so anyone on your team can pick up a conversation, see the full history, and respond fast.

10:19Set up in minutes on any device, keep your existing number, and add teammates as you grow. No IT, no hassle. And Quo's built-in AI agent handles after-hours calls, answers questions, and even books appointments so you never miss a lead, even when your team is offline. Money is on the line. Always say hello with Quo. Try Quo for free, plus get 20 % off your first six months when you go to Quo.com slash MBA. That's Quo.com slash MBA. Scaling a business takes the right expertise at the right time. Upwork helps growing teams quickly bring in specialized freelancers so you can move faster and take the business to the next level.

11:02Yes, Upwork is a sponsor, but I've been using Upwork for over a decade. In fact, I just hired a freelance videographer here in Europe while I'm traveling for work. I wasn't able to bring my videographer from Sydney, but it was so easy to hire somebody who's talented, ready, and local. Thanks to Upwork. Upwork helps grow your business by giving you fast access to specialized talent across more than 125 categories, so you can fill skill gaps, launch projects faster, and scale support up or down without committing to full-time headcount. It's a one-stop platform to find, hire, and pay expert freelancers across web and software development, data and analytics, marketing, business operations, and more.

11:40It's free to sign up and posting a job is super simple and easy. And with Business Plus, you can access the top 1 % of talent on Upwork. And with AI-powered shortlisting, you get matched to the right freelancer in under six hours. No endless searching required. Visit Upwork.com right now and post your job for free. That's Upwork.com to connect with top talent ready to help your business grow. That's U-P-W-O-R-K.com, Upwork.com. All right, that's out of the way. Step three, talk to real people. This is a step that most people skip because it's the one that is the most painful. It's the most uncomfortable step.

12:20It's the most important one, in my opinion. Before you build anything, you need to talk to at least, at least 10 people who have the problem you're trying to solve. I'm not talking about your friends. I'm not talking about your family members. I'm not talking about your neighbors. I'm talking about people that actually have the problem that you're trying to solve. They're actively trying to solve this problem. In other words, real potential customers. You need to find them and speak to them, whether you're going to speak to them on a Zoom call, in person, on the phone. And you can find these people easily within your own groups, with your own Facebook groups, in your own network, in your own Instagram followers, whatever it might be.

12:56If you just post and ask people to reach out to you. If you are serious about building a profitable business, this is a step you don't want to miss. You don't want to skip this because this is what it's all about. This is where the rubber meets the road, where you actually talk to real customers, people that actually want what you have. And you've got to be proud enough, proud about what you've built or what you're about to build to talk about it. So what you want to do here is you want to tell them that you're researching a problem that you would like to solve. And you'd love 10 minutes of their time to see if you can help them out in some way, that you can learn about the problem that they're going through so that you can solve it better.

13:32And I'm going to give you a script. Ask these three questions. How big of a problem is this for you on a scale of one to 10? Next question. What have you already tried to solve it? What have you already done to try to solve this problem? Or have you just ignored it and not done anything? And number three, what would be the ideal solution for you? What would it look like for you? And you can tell them, you can imagine any kind of solution. Like literally, like say, for example, they're like, I want to learn how to play the piano. Well, if I could just download the script or download the skill into your brain, would that be the best solution?

14:05Yeah, that'd be amazing. It'd be like the Matrix. Okay, that's fine. That's a good answer. Why? Because it means they care about how fast they learn it. They want to pick it up as fast as possible. So if you can do it better than the competition, if you can get them to learn how to play the piano faster, they're going to pay your premium for that. In these 10 minutes, you want to ask those three questions with the purpose that you want to hear as much information from them as possible. So you want to listen more than you talk. So if you're going to go beyond the three questions, they're just follow-up questions so that you can hear more from them.

14:32You're not pitching here. You're not selling. You're learning. You're finding out what you need to solve, what you need to do to have a complete solution so that you can actually come up with something innovative, something that's different from what the competition's doing. And what you learn from 10 honest conversations is worth more than any kind of market research. And there's so much you're going to learn from this. You know, we did this like countless times in our history in all the businesses that we've run. But the one that comes to mind is we used to do this all the time at Webinar Ninja, where we would think of a new feature that we want to put into Webinar Ninja.

15:07We're not really sure if this is going to solve the problem, but we want to learn from our customers. So we'd reach out to our customers and say, hey, would you like to jump on a call? And we'd give them maybe, you know, some credit so that they can be able to get a free month of our software as compensation. And what we would do is we sit there and we would record the call and ask them, hey, can we record this call? and we would ask them some of these questions and find out what they're suffering from. What are some of the workflows that they're going through so that we can maybe solve some other problems in their workflow so that our software becomes more and more valuable to them?

15:36Now, the whole point of this market research is not only to solve the problem that we're trying to solve or to present a solution that would make sense to them and make them say, hey, yeah, I want that. That's a solution that looks attractive. But we also want to understand their world, understand what they're dealing with. We want to understand the language they use to describe this problem. And this is why we record this so that we can pull a transcription out. And this is super easy now with AI. We didn't have AI back in the day, but we just pulled a transcription out and we can use the same language when we are marketing to new customers.

16:07We can use the same language on our sales pages, on our website, so that we can describe the problem that they are describing on these calls in the same way so that when people hit our website And they'd be like, hey, this person really understands this problem. They must understand how to come up with a good solution. They must have a solution that's right for me. This is gold. Just this piece of having this conversation and having the language that they use will help your business grow in ways you can't imagine. So as you're having this conversation, ask yourself, do they describe this problem with a bunch of emotion?

16:39Are they getting fired up about this? Do they have a history of trying to pay for the solution and just been hitting brick walls and not really having a full solution or maybe it's solving one part of the problem, not the full problem. You know, do they light up when you describe what you're thinking about building, the solution that you have? Are they like, hey, hey, tell me more. And they ask you questions. If somebody's asking you questions about something you just said, it means they're interested. If you're getting all the right signals, then you know you found something that is really resonating.

17:07Now, you can do this this week. You could do this on the weekend where you can reach out to 10 people in your target market, whether they're people in your network, in your social network, people on your phone, literally take out your phone and look at your contacts and see who do I know that maybe have this problem, that maybe complained about this before, that maybe I worked with in the past and can give me some answers on some of the things that I'm looking for, some of the answers to the questions that I mentioned earlier. Write down exactly what they say in their own words or ask them if you can record the call.

17:35Get on a Zoom call or any kind of video call and see if you can transcribe it. Those words become your marketing copy later. You're going to love it. It's going to be one of the best things you ever do, even if you don't actually find the solution. You'll understand how to describe the problem better in your marketing just by transcribing that call. Hey, if this episode is giving you a framework you can actually use, that you can implement this weekend, I want you to subscribe to the show because I don't want you to miss the next episode that's coming up. Well, it's actually coming in a few episodes and this episode is something that we're working on right now.

18:07It's called how to create a vision for your business without feeling cliche, without being cliche. I'm gonna give you a step-by-step plan because this word vision gets tossed around all the time. What's your vision? What's your mission? What does that exactly mean? A lot of us, we start businesses, we get to work, we try to make a buck, and we forget about this whole thing of, maybe I need a vision. Maybe something that's gonna guide me and guide my team to where we're going, where we're heading for the future. So if you wanna cut through all the mumbo jumbo and understand how to build a business vision without feeling all corny, then you wanna tune in.

18:39Make sure you subscribe so you don't miss that episode so you get that episode automatically in your feed. Step four, make the offer before you build the product. I mentioned earlier that we pre-sold Webinar Ninja, that we actually sold the product before we actually had it ready. And I did this on purpose because before I started my software company, Webinar Ninja, I sold an information product called the DIY Webinar Guide, showing people how to run webinars, how to put the software all together. And I worked really hard on that product. I spent four months and Nicole and I shot videos and created guides and we created templates.

19:12and then we launched to crickets, okay? You know how many sales we got on that product? Two, okay, two sales. And that's not the worst of it. One of them was a chargeback, okay? One of them was actually fraud. Somebody stole somebody's credit card and they're just testing out the car to see if it worked. The other sale was from a friend, from a fellow entrepreneur, John Lee Dumas. Shout out to you, Entrepreneurs on Fire, who bought it just to see what I was working on. That failure taught me that I should not be investing four months of my life just to find out later that, hey, nobody wants to learn how to pull off the webinars that I was pulling off.

19:45No one wants to put all the software together. They want a tool. They want a solution. They want something that's going to do it for them. And that's how we came up with Webinar Ninja. So when I launched Webinar Ninja, I decided to do the opposite. I learned my lesson. I got burnt and I was like, OK, I'm not going to do what I did the last time. This time I would do the opposite. Instead of working on it for four months, I'm going to sell it first, then deliver it four months later. And that's exactly what we did. We launched it within 48 hours, 150 beta spots got sold. Then we opened up another hundred spots that got sold out in 24 hours.

20:14And that was proof that, hey, people want what I have. People are willing to put money down on something that doesn't even exist yet. It's just an idea. So when I say sell it before you build it, I'm not being metaphorical. Okay. I'm being literal. This is exactly what I did. And it's the best thing I did. One, because it validated the idea, but two, it allowed to have some money coming into the business to fund a better build of that product. We were able to basically get a seed round from our customers because they paid us money for the product before we actually launched. They paid us$250 as a deposit.

20:49And then from there, you know, you could do the math,$250 times 250. That gave us enough change for us to hire a good developer, to clean up the design, to be able to market the product and put out a product that actually has a better chance of success because we had some dollars behind it. So what I'm advising you to do is to try to sell your product before you actually create it. So we had a landing page that showed what the product would look like. We had some mock-ups. We showed them what the solution would be. We told them like, this is what it's going to do. This is how it's going to save them time.

21:22We show them the value. Let me bring this into real life. Say, for example, you want to start selling some really cool graphic t-shirts. You are a great designer and people love the things that you create. Let's say, for example, you are wearing one of these t-shirts to a party with all your friends. And one of your friends say, hey, I love your t-shirt. Like, where'd you get it? And then you say to them, hey, I actually make these t-shirts. Would you like to buy one? And they say to you, yeah, I'd like to buy one. In that moment, you need a transaction. In that moment, you need to say, great, it's$30.

21:51Can you send me$30 via Venmo or transfer the money or give me the$30 in cash? If they say yes, and they give you the money right now, You know that you have a validated idea. You know that people are actually interested in what you have. If they say to you, hey, oh, you know, maybe later or let me think about it, then you know that that was all fake and they're just being polite, okay? You need to validate to see if people are willing to give you money for what you have, if they're willing to part with their hard-earned dollar. This is where the rubber meets the road. And if you are feeling embarrassed, if you feel scared in that moment to say, hey, would you like to pay for this t-shirt?