Funny, once I have the assumptions written down, I've found it's pretty easy to test them. For instance, I looked into a "turbo tax for personal bankruptcy" idea, and one assumption was "people considering bankruptcy have an internet connection". That was easy to test - when I talked to my target market, I just asked them about their internet connection. Turns out that's their lifeline to the world and they would never give it up - I got the impression they'd practically starve before turning off their internet connection.
Chris point of writing down your assumption and verify against it is really important to find your path to success.
To summarize ones assumption is not that hard. I found that the real challenge is in analyzing and making the right conclusion against the assumption made.
good post, re spending $1k to test out the hypothesis....the challenge for me as a first time entrepreneur has been exactly where to place that first (or only) $1k. do i get some mockup work done to show potential partners/investors how it will look? ...build some foundations of the initial code (paying someone to do that)? agreed to invest a little and test the idea, i think the challenge for me is what is the most productive first step in doing so.