There are many reasons why startups fail, and you've probably read a few listicles detailing 10 or 20 of them. But really, the truth is much simpler.
Nothing hurts more than seeing someone put a ton of work into their startup and fail. In my spare time, I mentor startup founders to help them get their footing, so I see firsthand why 90 percent of them fail.
Don't get me wrong: few things are better than seeing a startup succeed. Founders put their hearts and souls into these passion projects because those projects represent dreams, ideas of a lifetime, or ways to self-guided success. When a startup succeeds, the euphoria is unlike anything else. But when it fails, the pain is palpable.
There are many reasons startups fail, and you've probably read a few listicles detailing 10 or 20. But in reality, the truth is much simpler.
"Okay, Jeff. What should I avoid, and what will keep my business in the black?" There are two critical success components of any startup, and we'll discuss both.
1) Do You Have a Product Your Audience Will Love?
No startup can succeed without a product (or service) the audience wants and needs. So, why do so many founders take that for granted?
Research consistently shows that the biggest reason startups fail is that the market doesn't need them. So, you spend time and effort on a product no one asks for. Understanding why is your first step to fixing the issue.
The harsh truth is that what you love won't always match up with your audience. And yet, it's easy to get others, like family and friends, to agree initially. The problem? If the market doesn't respond, none of the early opinions matter.
Build a Market Fit Process
Overanalyzing and assessing potential new products aren't as sexy and romantic as late-night ideas sparked by your dreams. But without testing, those ideas might not be that brilliant.
Testing product-market fit is a standardized process. For starters, consider these five steps:
- Determine your target customer. Who do you want and need to target?
- Identify needs for that target customer that other products have not fulfilled.
- Define your value proposition or how you want to fill that unmet need.
- Create your minimum viable product. Include only enough features to determine whether you're going in the right direction.
- Test your minimum viable product with the audience set you have defined.
You'll have to go through plenty of trial and error. Rather than charging ahead with what you think is best for your audience, let them decide.
You'll also need market research. You're biased during the development process, so put your faith in hard data. It's the only way to ensure you know what your audience wants before you spend your money and capital on an idea. If the market supports your brilliant idea, great! If it doesn't, go in another direction. The customer development model for building a new product can help shift your attention to audience needs.
2) Can You Get That Product in Front of Your Audience?
Making a product your audience wants is just the start. Remember, there are two critical success components of any startup. First, your product won't matter if customers don't know it exists.
That brings me to number two: marketing. Word of your product won't spread overnight. If that were the case, no brand would need professional marketers. But it would help if you had more strategy. Without a plan designed to get your product in front of your audience, it'll stay on the shelf.
Build a Comprehensive Marketing Plan
Your product might be the perfect fit for your audience; they just don't know it yet. You'll have to convince them, and this is where startups struggle. Established brands can prioritize goals of brand awareness, increased conversions, or customer loyalty, but a startup needs all three.
You'll need a comprehensive, multi-channel marketing strategy to get the job done. We know it takes 13 or more marketing touches to generate a lead. Turning that same prospect into a customer requires a strategy. That strategy needs to include:
- A clear definition of your target audience, including both demographics and interests
- Defined marketing goals that tie directly to your business objectives
- A description of your core product benefits
- An explanation of the voice and tone you'll use to reach your audience
- An outline of each channel you plan to leverage and how each channel ties into the overall plan
- A specific timeline to track success and make improvements
You can look for help along the way, too. For example, if your budget limits you to making social media posts and crossing your fingers, you might have to.
Building a startup is impossible without a great marketing plan. But once you build it, you'll be positioned to make a real impact in the market and pull audiences toward your product.
Implement the Simple Formula for Startup Success
Please don't get overwhelmed by details (I know I threw a lot at you). Instead, keep the big picture in mind. When you do, the road map to success is a clear path.
Details about manufacturing or repeat customers don't matter if you don't have the right product-market fit or a marketing plan to get that product in front of your audience. Those are the two critical success components of any startup: get the audience what they want and make sure they know about it.
If you leave this post with only one takeaway, make it this: you're not alone. Professionals are willing to help you find your fit and market your product. But they'll be worthless without your sweat equity. With your ideas and expertise, though, you'll power toward success.