You must test business ideas before they become your business opportunities and before you start transforming them into the real business.
For you, the business ideas are something that you believe will work as a profitable business. When you include the customers needs into the specific idea it will become a possible business opportunity ready for the future startup. Here, I want to talk about a technique from statistics to test business ideas using the null hypothesis.
For example, you have a business idea that can be presented as a statement that statisticians will call it a hypothesis. The hypothesis in the simplest words are ideas that need to be tested for approval.
Using the null hypothesis to test business ideas
If we want to use statistical language in this process, we can tell that your business idea is a null hypothesis, and now we want to test it with another hypothesis that are opposite to the null hypothesis. The opposite hypothesis for your null hypothesis will be that the business idea will not succeed, or it will fail.
It is important to think about all possibilities in the process of initial development or process of testing the initial business idea. One of them is that the idea will not succeed in the target market.
Related: 136 Business Ideas to Start Your Entrepreneurial Journey
Look at the picture below as an example of this.
What does this mean for you when you test business ideas?
- You have your business idea with the null hypothesis that will succeed in the target market as a sustainable business.
- The alternative hypothesis is that your business idea will not succeed in the target market as a standalone sustainable business.
- There are different reasons for the alternative hypothesis. Your job is to find all the most important reasons that can lead to failure of your business idea.
- Each reason that leads to failure you can avoid if you as an entrepreneur prepare concrete action steps for them.
This is the process that you must apply before you start your business. Test your ideas if you are a startup entrepreneur, or before you start implementing them into your current business. Always use an alternative hypothesis, something opposite if you want to test future success.
The last, but not the least important thing is that you must always see things as they really are.
