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Entrepreneur, test your hypothesis!

When starting as an entrepreneur, it is important to identify the key hypotheses of your business and test them as soon as possible.


Teijo Javanainen

projektipäällikkö, yrittäjyys ja liiketoiminnan uudistaminen
Haaga-Helia ammattikorkeakoulu

Published : 02.03.2023

In the Haaga Helia Startup School pre-incubator program, we strongly focus on testing the participants’ ideas during the program. We facilitate this through workshops around design thinking, prototyping, and business design.

Testing can include, for example, customer interviews, surveys, testing of prototypes, or even testing advertisements before they are published. Testing is essential for new entrepreneurs because it helps to minimize risks, validate assumptions, understand the customer, improve the product or service, and save resources.

Testing hypotheses helps to understand the needs of customers better

In the context of new ventures, hypotheses may include assumptions about product demand, target audience, market size, and competitors. Testing helps to avoid making false assumptions. In addition, when assumptions are tested, it becomes clear which ones work and which do not.

When we test our assumptions, we can get valuable customer feedback. This helps to develop products and services that meet customers’ needs. However, the entrepreneur must remember that testing does not just mean developing the product or service and understanding the market and customers.

What is strong and weak evidence?

When evaluating the potential success of a new business idea, the strength of the supporting evidence can make all the difference. The strength of evidence refers to how reliable the evidence is in supporting or refuting a hypothesis.

There are four key areas to consider when evaluating the strength of evidence:

  1. Opinions versus facts. Evidence based on opinions or beliefs are generally weaker than evidence based on observable facts or events. While opinions can help gain insights and perspectives, objective facts are more reliable.
  2. What people say versus what people do. What people say in an interview or survey may not accurately reflect their actual behavior or future actions. Observable behavior is a more reliable predictor of how people will act in the future.
  3. Lab settings versus real-world settings. Testing in a controlled lab setting may not accurately reflect how people will behave in the real world. Observing people in a real-world environment is the most reliable predictor of future behavior.
  4. Small investments versus large investments. Small investments, such as signing up to be informed about an upcoming product release, are relatively weak evidence of interest. Large investments, such as pre-purchasing a product or putting one’s professional reputation on the line, are strong evidence of genuine interest.

By evaluating evidence in these areas, entrepreneurs can better assess the potential success of their business ideas. Strong evidence provides a solid foundation for decision-making and helps reduce the risks associated with launching a new venture.

Data is king

When evaluating evidence to support or refute a hypothesis, it is crucial to consider the strength of the evidence based on gathered data. Strong evidence is key to making informed decisions and increasing the likelihood of success.

Testing hypotheses is a critical part of an entrepreneur’s success. It helps to avoid wasting time and resources on false assumptions, to understand customer needs better, and to learn faster. Entrepreneurs should be brave in experimenting and willing to change their assumptions.

Further reading

Bland, D. 2019. Testing Business Ideas. Wiley. Hoboken, NJ. E-book.