Testing Business Ideas

Testing reduces risk.

To avoid the trap of committing to a business concept that doesn’t pan out, test your ideas rigorously. Testing helps you avoid investing in ideas that might lead you astray with false hopes of gains.

Use design thinking to transform nebulous ideas into well-thought-out value propositions and powerful business models. Careful forethought can boost a venture’s profitability and strengthen your competitive position. To test complex business ideas, break them down into small components. Then frame a discrete hypothesis that tests for three forms of risk:

•  A lack of customer interest in your idea.
•  An inability to deliver the product.
•  Insufficient pricing power to generate profits.

Once you know the risks you are calculating, conduct experiments to test your most critical challenges. Then, modify your ideas based on the test results. You can access a variety of testing tools to try out separate parts of new ventures, for example creating and assessing different website landing pages. Even as you consider ...