There are plenty of reasons for a business to fail. Most of them left beyond statistics, as we know about unsuccessful attempts only of those who showed some “signs of life”. Most attempts never even left the kitchen, where the blueprint was discussed. However, we have enough data to offer a few tips to make your start less messy.
Before any action, study the market.
Half of the startups fail due to misinterpretation of market demand. That one time you shared the idea with your friends at a pub, and they said: “Oh, that’s such a cool product, I would definitely buy that!” – is not market research. Understanding the market is critical for all businesses, but for startups, it’s crucial. The latter try to promote innovative products, often forgetting that the world is very diverse and most ideas someone has already tried to embody. So, the absence of a service on the market does not mean a free niche: more frequently, it means that no one needs such a solution.
Market research will also help you to understand your audience and to create a portrait of your ideal customer. With this figured out early, you’ll understand whom to target later. Meka Asony, a well-known investor and partner at First Round Capital, put it well: “You can have a beautiful product, but if you are selling it to the wrong audience, it’s going to look like you have a horrible one.”
Prioritize processes.
The best metaphor for prioritizing tasks comes from Google X’s Astro Teller (aka Eric Teller). Their work is devoted to innovative technologies, which means — doomed to a high percentage of failure.
“Imagine that you want to train a monkey to juggle flaming torches while standing on a pedestal in the town square. Tackle the hard part first because everything else is just going to create an illusion of progress.” In other words, you shouldn’t start by building a pedestal. First, you must ensure you can teach the monkey to juggle. The juggling is the narrow bottleneck on which the success of the entire task depends.
But if you start with a pedestal, you spend limited resources, tying you to the project even more strongly: you have already done so much for it! A breakthrough seems about to happen.
Get customers to your “killer feature” as fast as possible.
To sell your idea, you must show users its benefits as quickly as possible.
When Figma had just started, the company had trouble pricing the product. “The first time around, we wanted to gate the features you need for a design team versus what you need as an individual designer. So in the first iteration of Figma’s pricing model, the free tier limited you to only two users collaborating on a file together, but you got unlimited projects. And in the paid tier, you could have many more folks collaborating on a single file,” says Claire Butler, one of the company’s first ten employees.
However, this strategy didn’t work. Changing it did not just help with the influx of users but provided an understanding of Figma’s killer feature. “By limiting the number of folks who could collaborate on a file in the free tier, we weren’t enabling people to experience the magic moment of multiplayer collaboration. We reversed it so that in the free starter tier, you could only have a couple of files, but you could have an unlimited number of people collaborating in that file.”
Another example is Pitch Avatar, a service for online presentations, product demos, and lead generation. Its main “killer feature” — is an instant notification on your document being viewed and a prospect’s possibility to “summon” the presenter even while watching a presentation. All the slideshows, ads, and promotional materials contain the “Call presenter” button for a feature to stand out.
Diversify your experience.
We’ve already mentioned that the approval of your inner circle can play a cruel joke, forming elusive opinions about the market. In this tip, the reason behind your friends’ approval matters. Usually, people unite based on some common ground: neighbors, hobbyists, or friends from college. So, to put it differently, these groups have similar views.
On the other hand, people with different backgrounds can bring unexpected opinions that will help you understand the market, improve the existing product and even expand your reach. Don’t believe it? You can’t beat the statistics:
- About 70% of diverse companies are better positioned to capture new markets.
- Diverse teams are 87% better decision-makers than individuals
Even if you don’t have room for another team member, try to speak with people outside your so-called bubble.
What about money?
Almost ¾ of startups use their savings at first. Needless to say, this is one of the most significant challenges faced by those who want to start their own business.
The most realistic ways to find money are (aside from your savings or help from friends/family):
- Mutual assistance: a freelance friend helps you with the design, and you offer them your services in return;
- Loans from a bank are tricky ones, though: reputable institutions are not eager to give loans to new businesses. So more often than not, these that are willing to provide financial aid are most likely planning to strip you;
- Incubators, accelerators, and grants are slower but way safer than loans. At least if you fail, you do not have to return the money;
- Competitions, hackathons, summits, awards, camps — you may not find the money right away, but this will definitely improve your social network and bring an unexpected solution.
Try again.
Be prepared to fail. So that when that moment comes, it doesn’t break you. The statistics on a “loser’s” side: founders of previously failed businesses have a 20% higher chance of success with their next venture. Susan Wojcicki, CEO of YouTube, once said: “Rarely are opportunities presented to you in a perfect way. In a nice little box with a yellow bow on top. ‘Here, open it; it’s perfect. You’ll love it.’ Opportunities – the good ones – are messy, confusing, and hard to recognize. They’re risky. They challenge you.”
