The Simplest (and Quickest) Way to Validate Your Business Idea and Find the Perfect Niche

April 26, 2016 , 11 Comments

So, you have this idea for a business or maybe a new niche to enter. This is perhaps the most crucial moment of the entire project: what you do now will determine whether you dive head-first into a world of pain or whether you'll be taking the first steps towards a thriving new business.

Watch the video below to see the simple approach I use to validate any new business idea in any market.​


Simple Business Validation

To learn about this process in step-by-step detail, check out The Impact System.

Here's a quick summary of the steps from the video:

​Look for an Active Marketplace

The number one thing you need to validate for a new business is that there will be customers. Look for existing businesses that are successfully selling something to the people in your target audience. The more active the marketplace and the more evidence there is that your target audience A) has money and B) likes to spend it on product similar to yours, the better.

Find a Clear Point of Differentiation

Of course, if you enter a busy market with a copy-cat product, you won't get very far. What you want to do is enter a busy market, but with a product that has a clearly identifiable advantage over other products.

This doesn't mean that your product has to be "better" overall. It can also be different in such a way that makes it more suitable to a certain kind of customer.

The important thing is that when someone asks "why your product instead of another one?" there needs to be a clear answer.

To learn more about this, check out this post about how to create a unique selling proposition and this post with great examples of unique selling points from different niches.​

Get Feedback Fast

The next step is to create the smallest possible version of your product or business idea. This is often referred to as a minimum viable product.

​This can take the form of a free report, a simple service or a low priced product. The important thing is to get real market feedback as soon as possible. You want to get to this step:

Click to see the full infographic

The Perfect Starting Position

Far too often, entrepreneurs will dream up a business idea or go after a niche with little or no validation. Maybe you think something is a great idea, but if you're the only one, there's no point building a business around it.​

This puts you in a position that can be compared to standing at the edge of a cliff, ready to take the plunge, but not knowing whether you'll be greeted by warm, calm waters or ragged rocks at the bottom.​

Here's the position I recommend you get yourself into, instead: you should have a crowd of people begging you to create a product for them. You should have a waiting list of eager buyers before you even start building your product.​

You Will Make Mistakes​

No matter how much planning, research and validating you do, one thing is for sure: you will make mistakes along the way. There's just no way of avoiding that.

This is why I personally like to take small steps. I know that some of them will be mis-steps and I know it's much better to take a small step in the wrong direction than a giant leap in the wrong direction.

Once you move past the phase of initial validation and the MVP, you will start taking larger steps. However, you should always try to keep a balance between the size of a step you're taking and the amount of validation you have.

To put that into practical terms, let me give you an example from my business: Thrive Leads is an advanced list building plugin for WordPress.​ The very first release version of this product took many months to develop and was already very feature rich.

That's an example of a BIG step. We invested a lot of time and money before getting the first round of feedback from the market.

Did we take a huge risk in doing so?

Not at all. This big step was backed up by a HUGE amount of validation in the form of Hybrid Connect. Hybrid Connect was the predecessor to Thrive Leads - an older and less advanced list building plugin for WordPress.​

Through this previous plugin, we already knew a lot about this market, we knew for a fact that there were thousands of buyers for it and we had already gathered a ton of user feedback.​

That's the kind of thing I mean when I say you should have a large amount of validation to back up any large steps you plan to take.​

Over to You

Now it's up to you: try to apply the method from this video to your own business (or a new business you plan to start). Let me know if you encounter any difficulties or have any other questions about making this work for you - just leave a comment below!​

Shane's Signature

About ​Shane Melaugh

I'm the founder of ActiveGrowth and Thrive Themes and over the last years, I've created and marketed a dozen different software, information and SaaS products. Apart from running my business, I spend most of my time reading, learning, developing skills and helping other people develop theirs. On ActiveGrowth, I want to help you become a better entrepreneur and product creator. Read more about my story here.

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  • Tim Lester says:

    This post and the one before are not outputting the correct title to your RSS feed. eg: The below is displayed for the title:
    Answered: How to Validate a Niche & Business Idea?tho_output_title(“9932”, {“27″:”Answered: How to Validate a Niche & Business Idea?”,”28″:”The Simplest (and Quickest) Way to Validate Your Business Idea and Find the Perfect Niche”,”29″:”Here’s How You Can Know For Sure if Your Business Will Succeed (Before You Ever Start Building It)”}, []);

    You can see it at

    • Thanks for the heads-up! Will investigate and get that fixed. :)

  • I saw so many GREAT ideas and the owner builded up a full service, shop or homepage not for the customers but the idea. I thought the idea it was really good but they forget to ask the people that is it good for them too.

    I think here it is the key: LOOK FOR AN ACTIVE MARKETPLACE. If u find this everything will be much easier!

    • Thanks for your comment, Tamas. Yes, the thing with the active marketplace was a really important insight for me, a few years ago.

  • What video editing software are you using for your videos. I would like to make similar videos on my new Thrive Themes blog I just created?

  • Thanks, Shane.

    Sometimes, you just to keep going back to the basics to get it right…

    Case in point here: there is nothing new in this post, but there is wisdom!

    How many will listen and finally get it this time?

    Maybe me! ;-)

    • Hello Trevor,

      Thanks for your comment! True, I haven’t said much new in this post. This is one of the reasons I like answering reader questions: we can otherwise easily forget that sometimes, you need to hear something in more than one way before it clicks.

  • Thanks for this, Shane.

    I enjoyed the video and article very much, and it came at a time when I needed to read something like this.

    • Thanks for your comment, John! Glad to know this was useful for you!

  • Very interesting idea, to move in small steps. So you constantly can test the market, and let the “clients” help build the business from their feedback.

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