Don’t Invest Before You Validate Demand

Many entrepreneurs worry that discussing their idea publicly will allow someone else to steal it, but execution is almost always more valuable than secrecy. Experienced entrepreneurs understand that ideas are common while successful implementation is difficult. Talking with customers rarely creates competition. Instead, it creates understanding.

Ask about behavior, not opinions

Those conversations should focus less on asking whether people “like the idea” and more on understanding existing behavior. People naturally want to be encouraging, especially in smaller communities where relationships matter. Asking, “Would you use this software?” often produces overly optimistic answers. Instead, ask questions such as:

• How do you currently solve this problem?
• What does that process cost?
• What frustrations occur most often?
• What have you tried before?
• How much would solving this problem be worth to your business?

These questions reveal real demand rather than hypothetical interest.

Start small with an MVP

Another costly mistake is building too many features too early. Entrepreneurs frequently envision a complete platform with dashboards, reporting tools, mobile applications, artificial intelligence, integrations, customer portals, payment systems, and dozens of additional capabilities. Each feature adds development costs while increasing complexity. Instead, successful software businesses often begin with remarkably simple products.

Rather than creating an all-inclusive platform, many launch with what is commonly known as a Minimum Viable Product, or MVP. An MVP includes only the essential functionality needed to solve one clearly defined customer problem. Instead of attempting to satisfy every potential customer, it focuses on delivering one meaningful outcome exceptionally well.

This approach allows entrepreneurs to begin generating customer feedback much earlier. Instead of spending eighteen months building software behind closed doors, they can release an initial version within a few months, learn from actual users, and improve based on real-world experience. Customers become partners in shaping the product rather than critics evaluating a finished solution that may miss the mark.

Test demand without writing code

Technology has also made validation easier than ever. Entrepreneurs no longer need completed software to determine market interest. Landing pages, online demonstrations, digital surveys, pre-orders, email waiting lists, clickable prototypes, and even manually delivered services can all help measure demand before investing heavily in development. In many cases, entrepreneurs can test whether customers will purchase a solution without writing any software at all.

For example, suppose a business owner in Sioux Falls wants to build software that automatically schedules maintenance for commercial fleets. Rather than immediately hiring developers, they could first offer the service manually using spreadsheets and existing scheduling tools. If customers willingly pay for the service, the entrepreneur gains confidence that automation through software represents a worthwhile investment. If customers show little interest, valuable lessons are learned before significant capital has been spent.

This philosophy is especially important for businesses operating with limited resources. Unlike venture-backed technology startups in larger markets, many entrepreneurs throughout North and South Dakota are investing their own savings or borrowing through traditional financing. Every dollar spent on unnecessary development reduces capital available for marketing, hiring employees, purchasing equipment, or expanding operations.

Building software should accelerate a proven business model, not become an expensive experiment searching for one.

AI does not create demand

Artificial intelligence has lowered development costs and increased access to software creation tools, but it has not changed the fundamentals of entrepreneurship. AI can generate code, design interfaces, write documentation, and speed development significantly. What it cannot do is create customer demand where none exists. Technology reduces the cost of building products, but it does not reduce the importance of understanding markets.

Entrepreneurs should also remember that software companies are still businesses. Success depends on customer acquisition, pricing strategy, retention, support, cash flow, and ongoing product improvement. Many founders devote enormous attention to programming while spending comparatively little time learning how they will consistently attract and retain paying customers. But truthfully, marketing and sales often determine success far more than technical sophistication.

Where to get help

This is where experienced business advisors can provide tremendous value. Organizations such as the Small Business Development Centers, SCORE, Veterans Business Outreach Centers, Women’s Business Centers, and local economic development organizations regularly help entrepreneurs evaluate ideas before significant investments are made. They can assist with market research, financial projections, customer discovery strategies, pricing models, and business planning. Asking difficult questions early often prevents expensive mistakes later.

There is also tremendous value in starting with industries entrepreneurs already know well. Some of the strongest software companies emerge because founders have lived the problems they seek to solve. Contractors understand construction. Farmers understand agriculture. Healthcare professionals understand clinical workflows. Manufacturers understand production bottlenecks. Deep industry knowledge often produces better solutions because founders recognize challenges that outsiders overlook. Even then, however, experience should be validated through conversations with many prospective customers rather than assumptions based on one business or one community.

Listen first

Perhaps the most encouraging reality for entrepreneurs across the Dakotas is that validating demand costs far less than correcting poor assumptions. A few weeks spent interviewing customers can save months of unnecessary development. A simple prototype can reveal whether a market truly exists. A pilot customer can provide insights that no brainstorming session ever could.

Innovation remains one of the strongest drivers of economic growth in North Dakota and South Dakota. New software businesses will continue emerging across agriculture, healthcare, energy, manufacturing, logistics, education, and countless other industries. Many will create jobs, improve productivity, and strengthen regional economies. The entrepreneurs most likely to succeed, however, will not necessarily be those who build first. They will be the ones who listen first.

Ultimately, successful software companies are not built on great ideas alone. They are built on solving problems that customers are already willing to pay to eliminate. Before investing thousands of dollars in development, entrepreneurs should invest dozens of conversations in understanding their market. The goal is not simply to build software. It is to build a business.

In the end, the most valuable line of code is often the one that is never written because customer conversations revealed a better opportunity. For entrepreneurs throughout North and South Dakota, validating demand before investing in technology is not slowing innovation. It is increasing the likelihood that innovation becomes a profitable, sustainable business.

By Michael Danielson, Veterans Business Outreach Specialist, VBOC of the Dakotas. Photo courtesy of VBOC of the Dakotas.