Test out your business model

Validation and testing assumptions

Why is testing and validating so important? 

It’s important to constantly validate each aspect of your business model.

Continually testing and validating what you think you know about your business will mean you can adapt, learn and grow as you go. We’ll help you learn tools and techniques to test the assumptions you make on a daily basis about your customers.

See what's good, or not

Getting into the habit of testing any assumptions you make about your business will enable you to work out what’s working and what’s not sooner, rather than later.

Customer/client development model

Once you think you’ve found a business model that works, you’re into the customer creation and company building phase where you can then scale your business. The diagram below is Steve Blank’s customer-client development model, which shows the different phases you’ll go through.

Ask yourself big questions

Start questioning what you know

Give yourself some time and write down any assumptions that you've made about your business so far.

This could be anything from ‘I think my typical customers are aged between 25 and 35 to ‘I believe my customer values the functionality and convenience of my service.’

Then question:

  1. How do I know this?
  2. Do I know this for certain?
  3. Have I tested that?
  4. Do I need to test this further?
Information Message

Challenge your assumptions

What assumptions have you made about the following things?

  1. Your value proposition
  2. The product/market fit
  3. Your customers
  4. The channels that you use to reach your customers
    • Marketing channels
    • Sales channels
    • Distribution channels
    • Feedback channels
  5. The type of relationship that your customer wants from you
Information Message

Take your questions further

If you need a bit of help, you could work around each section of the Business Model Canvas highlighting the assumptions you’ve made about the rest of your business model. Include areas like: key activities, resources and partners, cost structure and revenue streams. 

Once you’ve done this, you’ll have a list of assumptions that you’ve made about your business. But it’s important that you don’t just do this once, and forget about it – asking yourself questions like this should be part of a continuous process that you adopt within your business practices.

Information Message

Fail fast, fail cheap, fail smart

How can you test your assumptions and your overall business model so you stay adaptable to your customer needs? The feedback loop is the answer – it’ll help you test and validate your business following a short, cyclical process, rather than a more traditional linear development. See how it works in the diagram.

Other techniques

There’s lots of different ways people use to gain feedback and insight including:

  • Using the customer discovery techniques
  • Rapid prototyping
  • MVPs (minimum viable product)
  • Design sprints
  • Agile sprints
  • Design thinking

All the techniques follow the same basic principles of building something to test, measuring the feedback and learning from the findings.

Information Message

Test and learn

Think about the previous assumptions you’ve highlighted and think about what techniques you might use to test those assumptions, and how you could do that. Try answering the following questions for each.

  1. What specifically do you need to find out?
  2. Who has that information?
  3. How can you access that information?
  4. What techniques can you use?
Information Message

What’s an MVP?

A minimum viable product is the simplest, most minimal form of your product or service that you can put out to market to test some key assumptions about your business.

It could help you:

  • Get customer feedback
  • Make mistakes on a smaller scale
  • More easily explain what you’re trying to do
  • Understand the financial implications
  • Get a better idea of every element of your product – marketing, customer acquisition, etc.
Information Message

What’s a pivot?

A pivot is a change in strategy without a change in vision.

Why is it important?

It’s all about falling in love with the problem, not the solution.

As an entrepreneur you need to be open and not only willing to listen to feedback, but also seek it out, even if it's different from what you originally thought.

Objectively listening to feedback will allow you to change direction, or pivot when you need to.

Information Message

More ways to build your business

Now you’ve taken the first steps to validation and assumption testing success, you could check out: