How Not To Fail As A Startup
According to published reports, 2/3rds of the startups fail and as per this article (https://www.startups.com/library/expert-advice/why-do-startups-fail), these are some of the top reasons why startups fail:
42% no market need
19% get outcompeted
18% because of pricing / cost issues
17% poor products stemmed from lack of understanding of their market
14% ignore customers i.e. lack of product-market fit
I work with startups with an aim to making today’s startups more customer friendly and extend their life. Here are 3 things that a startup founders can do to avoid the mis steps and set themselves up well. These pointers are for startups with a customer interface i.e. fulfilment component to their process where they actually work with customers i.e. not pure platform based startups.
Deeply empathise with your customers: its not just about listening to your customers, but about living their needs, wants and how your product or service helps them. A startup should have all this data available, even then it is always advisable to corroborate your understanding of what you see in the data with actual customer discussions. The exercise on empathy will give you a fairly good idea of your customer’s environment, how they make their decisions, what are the basic must haves. This empathy will give you a fair idea of what you need to address, at what stage of the journey.
In one of my customer interviews, the customer mentioned they had scoured the internet for reviews (ours as well as our competition) before deciding to go with us. We did not know that this was even a criteria, nor were we were actively monitoring online reviews up until then.
Extending the empathy, empathise with those that did not lock in with you and why. Our competitor interviews gave us a gold mine of information that helped in our pricing, contracting, decision making as well as sowing seeds for another opportunity to work with them in the future.
Understand the market / competitor and their positioning: typically this is a desktop exercise where you have someone from marketing provide a competitor report. Here are some further suggestions:
- are there published reports on the industry
- is your playground filled with other startups or includes established players
- what sort of brand-names do they have — is there a pattern
- what do the products look like
- what is the brand promise and how can you see competitors living their promise
- what reviews can you read about them, can you detect a gap
- which industries are they servicing and are you / can you be present in those too
- who is backing them up and what sort of capital / runway do they have
- how do they promote their products / service — do they have a blog or an influencer
it makes sense to take a step further and speak with your others for a more wholesome understanding. Speak with your service delivery, if your startup is not just a platform, walk a day with your sales team.
Build a wholesome picture and look for gaps and ways to disrupt it to your advantage.
Where are you getting your sales leads from: look to understand which customers are interested and why. Understanding this might show a natural gap in the market that your company is fulfilling now. Are there some recent changes that is increasing your lead flow — what are they, how many can you expect and how can you be better prepared when a lot more calls come through.
With one customer segment I worked on, we knew that the legislation changed but it did not account for the increased increased sales requests that were coming in. When we did our customer interviews, we realised that the potential customer HQ now had an internal deadline by when they need to install this service. So strengthening our marketing and sales activities were needed while improving supply chain and delivery processes were needed to be ready to capture the influx of orders.
With one startup that was branching off into a new vertical, we did one pilot and suddenly started getting leads from others. It turns out this part of the market is unserviced and we got ourselves a gap that we can work on.
What can your product do really well that others can’t: This is really about finding the sweet spot. Knowing what your customer’s priorities are and where the gaps are and where your product really shines. For example if you are a startup in an experienced market segment with established players, startups can usually provide exceptional service since there are fewer customers; or there is an opportunity to co-create a product with a large customer brand, which might be an impossible ask for a large competitor. Not only will co-creation give you a deeper understanding of how your customers want and use their product, you could use co-creation as a vehicle to get on board with a big brand name customer. True, as you grow you would need to establish processes that will work for all customers, but if you have taken care of your first 10 customers well, it gives a great platform for you to expand on.
These are 3 steps that every founder can and must do if they want to stay relevant with their customers and win in the marketplace. Do this consistently and you will identify your sweet spot and make your startup an outside in, customer embracing company with a long life.