How Entrepreneurs Beta Test a Business Idea, Proving You Found the Next Uber
Find Angel Funding & Venture Capital for Business Startups, Entrepreneurs, & First Time Founders – Episode 3
After you have your business idea and your sales pitch in place, the next step for an entrepreneur is to understand how to beta test his/her business idea. Before you can build a billion or trillion dollar empire, you might want to start with one sale.
Beta testing is a round of testing releasing your business to a wide audience. The objective is to uncover problems and issues in a controlled setting. This term beta testing is typically used in SAAS, Software as a Service, companies, but it can be applied to any business startup.
Start talking to people as soon as possible. Friends, family, and coworkers are a great starting point. What do they like? What do they not like? Personally, I have found the best way to beta test an idea is to go out there and actually try to sell it. The best way to see if there is a market for your business is to see if strangers will pay you for it. I recommend you do this under very controlled conditions in order to minimize exposing the potential problems of your business to a limited number of people.
If you cannot sell it, you need to expand your beta test or consider pivoting. You will save a lot of time, energy, and aggravations if you can discover this as early as possible. That is why I do this early and often.
What do you do if people do buy your product or service? Congratulations, this is a good thing! It means you are on to something. Try to fulfill the order. Do not worry about making money yet. Work on fulfilling the order. Profitability comes with growth and economies of scale.
You may be thinking, “I can’t fulfill the order, I am working on an app.” I would argue almost any business beta test their concept, even SAAS companies before their software is fully developed. For example, take Uber before their app was developed. You can place ads and hire a bunch of Uber drivers to drive people from place-to-place in their cars. You can also solicit customers that need rides through ads, networking, cold calls. Is this efficient? No. Will this be profitable? Probably not. Will this give you an idea of demand and identify some future problems? Definitely!
There is no downside when an entrepreneur beta tests their business idea. If you find out that nobody wants what you are selling, than you can pivot into something better. You also save a lot of time, energy, and aggravation down the road.
If you succeed, then you can leverage your beta test into moving forward with confidence. You also have data validating your business to potential investors.
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Disclaimer: This does not constitute an offer to sell, a solicitation of an offer to buy, or a recommendation of any security or any other product or service. We are not offering legal, investment, tax, or medical advice.