When you’re building your business plan, a lot of times, investors are looking for any indicator that you are destined for success. They want to see, in black and white, that you have a successful business idea.
Take It to the People
If you have a product-based business, go see how many of these things you can actually sell. Do a pop-up somewhere or just keep it casual (family and friends) if you have to, but start tracking your results: what you brought, how many people were there, how many products were bought. Use these opportunities to get feedback from those people that you sold to and see what kinds of information they can tell you about your products so that you can make improvements. This information can not only show early sales, but it also shows that you have actually beta tested this on some small scale. You can show that you have moved forward beyond just the idea phase and you’re actually executing.
If you have a service-based business, the same concept applies. See who you can get to be your first customers. Sometimes that means doing something at a severe discount or even for free; but those initial people can give you feedback that is valuable and can demonstrate that somebody tried to utilize the service and liked it. It can prove that your audience exists, that the market is there, and you can put that information into your business plan.
A Successful Beta Test
Now the size of your beta test is really, really important. You can start extremely small, but bigger is always better if you can baby step it out. Sometimes you are going to need to do this in pieces where you start with five people here and five people there, or depending on the scale of your business, maybe 500 people here, 500 people there.
The goal of these beta tests is to simply prove that you do, in fact, have a successful business idea. For example, I had one client with a design business. She was making backpacks for children that were customized and she wanted to get a small bank loan. At the time, she said to me that she just knew it was going to work and be totally great. While I appreciate the positive attitude, I did challenge her a little bit. I asked her if she understood that this was going to be a really hands-on business, and asked if she had considered getting out there and soliciting her products to see what happened?
I challenged her to see if she could get some early buyers and prove out her concepts so that when she went to the bank she could say, “I’ve brought this product to 30 parents, and 15 of them bought them, so obviously, there is a market for it, and my price point is spot on.”
After I challenged her with these thoughts, she decided to move ahead with her beta test. As it turned out, her beta test was SO successful that by the end of it, she had made so much money that she didn’t need the bank loan anymore. The beta test, in her case, ended up being a double benefit.
The Survey Alternative
Depending on your business, especially if it’s a larger business, you really want to make sure that your ducks are in a row quacking in sync and in tune. But what happens when you have something that is difficult to test? If you are manufacturing something that is brand new or you are inventing something that is brand new, the alternative to the traditional beta test is using a survey.
You can do a mass survey to a large sampling of people and get their opinion on multiple aspects of your product or service. You could include questions such as: “If you had access to this product, would you buy it?” or “If you had the option of purchasing this service, would you be interested in it?”
These responses can be compiled so then you now have data to show proof of concept. Doing a survey is a way to kind of get around the idea of not having an actual beta test formally put out there.
Once you have whatever beta test or survey that you have completed, you can put that into your business plan and present it to the investor or to the bank (or whoever your audience is). This approach shows that you have more than just an idea — you have something actionable. Investors can see you’ve already taken steps towards execution to prove out your successful business idea, and you are ready for greater action with their help if they invest in your business.