9 Out of 10 Startups Make These Fatal Mistakes
Only 10 percent of startups succeed. How can you make sure yours is one of them?
You've done it. You just came up with a brilliant idea that could actually have legs. You've run the scenarios through your mind a million times, assessed the competitive landscape - there is none - told friends and family, and they agree - it's infallible.
The market needs this. In fact, they will be thrilled it's finally available. Could you have possibly stumbled upon the next billion-dollar idea? All signs point to yes.
So why is it that, even with a full helping of entrepreneurial savvy, investor intrigue and a gung-ho spirit, the rate of attrition for startups is a staggering 90 percent?
I can tell you from first-hand experience that companies that aren't afraid to ask themselves the tough, and sometimes uncomfortable, questions are the ones that have the greatest opportunity to succeed. If you're able to answer these thoroughly and honestly, you're on your way to being a part of the 10 percent.
1. Is my idea something people really need? Really?
At the root of every successful and sustainable business is a solution - a solution that meets some basic human need or desire, one that solves a problem in a very niche area, or even one that fulfills a need we didn't even know we had. It's absolutely crucial from the second your idea is hatched that you're doing actual research to challenge your assumptions about what you believe its need is.
A Fortune report indicates that 42 percent of startup founders pull a mea culpa and admit that the market wasn't as hot for their idea as they initially thought. To avoid failing for this reason, you have find the "whitespace" in the market.
How big is the market? It's okay to be niche, but the market needs to exist beyond your kitchen table. Where are your opportunities to present a solution in a way that your competitors haven't thought of? Heck, do you even know who your competitors are?
If you do, and they're owning the space, why? Perhaps most importantly, are you leaving any opportunities on the table? Is there another segment of the market your idea is a better fit for or one you could expand into?
If you're honest with the assessment of the market and your place in it, and all signs point to move ahead, then don't be afraid to tinker with your idea so you continually stay ahead of the curve. The best way to do that is by gauging reactions of your target audience. The single most important thing you can do as a startup is to identify the whitespace.
2. Have you user tested your idea?
When you hear the term "prototype," chances are you immediately think of a 3D model or beta version of an app. And if your big idea is one of those things, then you already know the importance of testing.
But beyond the physical, have you considered the psychological or emotional appeal of your business? What about your pricing model? What will motivate potential customers to buy, download, activate, use, and even share your product?
Every aspect of an idea can and should be tested. Your pricing model, acquisition channels and costs, conversion strategies, and branding messages can all be put through the scrutiny of your end users.
Seek their feedback early and often on everything from the cost and design, right down to the voice and tone of your startup's t messaging. And yes, you should be thinking about branding during the development phase. Startup secret: branding is part of the product design.
The most glaring error I see unsuccessful startups make is waiting too long to test. If you're already in development, all the smart UX design in the world isn't going to cover for your lack of testing product features among users.
They will tell you what they want and don't want, saving you a tremendous amount of time and money. Many startups fail, or have to go on a fundraising sprint too early due to code debt.
I touched briefly on branding in this section, but its importance in the process can't be understated. That leads me to important question number three:
3. What are you all about?
Step back and think of the reasons you're pursuing this venture. You had an idea that solves a problem, and if you solve a problem, you change the world, right?
Don't be afraid to think from this lofty perch, but you and your team have to be rooted in the 'why' of what you're doing.
Your startup's purpose will help shape your story and give your team one central vision to rally around. I'm willing to hypothesize that 90 percent of startups fail to unify their reasons for existing, and starting from a discombobulated position is a recipe for disaster. Only when you're aligned internally are you ready to share your message with the masses.
Keep in mind, you are building a business, not just an idea. Gaining market intelligence to validate whether or not an opportunity exists before you start developing a strategy will save you time, money, and resources, and ensure you build something your end users love.