Edition: February 25th, 2022
Curated by the Knowledge Team of ICS Career GPS
- Excerpts from article by Alexander Zheltov, published on Entrepreneur.com
Studies show that around 20% of startups are closed in the first year, and half of them within the first five years. A report states that 35% of startups fail because of a lack of market demand, among other failure reasons like — cash flow problems, getting outcompeted, a flawed business model, and legal challenges.
Before launching your business, you should do some analytic work with your team if you don’t want to waste time and money solving non-existent problems.
Here are 3 tips to help you create a successful startup:
1. Stop romanticising about the business idea.
- Loving what you do and doing what you love sounds romantic and inspiring, but not in the business world.
- You need to first assess whether there’s enough market demand for your passion to be profitable.
- It’s much better to ask yourself these questions before starting a business:
- What is the real reason you want to start a business?
- What are your personal and business goals?
- Who is your customer?
- What problems does your customer have, and how can your business resolve them?
- What do your competitors propose, and how will you differ from them?
- Which resources do you need for launching your business?
2. Don’t underestimate your competitors.
- You need to look at the market soberly and analyse your competitors.
- This is especially important if you are going to attract investments.
- After all, one of the critical questions that a potential investor will ask is your competitive advantage.
- Here’s a three-step system you can use to analyse the market:
- Primary research
- Instead of conjecturing on what the consumer wants, you can ask them directly.
- Use questionnaires, research and interviews for this.
- If you already have customers, you can use statistics from Google Analytics, YouTube, social media, email-services reports and other platforms to understand customers’ preferences and behaviour.
- Secondary research
- Systematise the information received and study it in detail.
- Does this match your understanding of the market?
- How can your product solve customer requests?
- SWOT analysis
- A SWOT analysis is a reliable way to study the strengths, weaknesses, opportunities and threats of an idea.
- From the analysis, you can decide whether the market needs a product and whether you’ll get the profit you expect.
- You can easily find templates for this system on the internet and conduct an analysis.
- Primary research
- As the result of this research, you’ll find the answers to these questions:
- Who are your customers, and what are their sales, valuations and limitations?
- Who are your competitors, and what do your potential customers like/dislike in their products?
- What should you propose to the market to be more successful?
- What kind of unique offer can you provide?
3. Test your hypothesis.
- Once you’ve researched the market and know what the consumer wants, you need to ensure that your product meets their demand.
- This should be done with as few expenses as possible, in the form of an MVP (Minimum Viable Product).
- An MVP provides an opportunity to develop a new product for less money and collect reviews from potential customers.
- Another instrument to validate your assumptions about future business is A/B Testing. You can use this method to check what kind of website version or design customers like better.
Only after these three steps should you start looking for investments and teams. This way, you can be sure that money and effort will not be wasted, and your startup will not fall become a mere failure statistic.
Have you checked out yesterday’s blog yet?
(Disclaimer: The opinions expressed in the article mentioned above are those of the author(s). They do not purport to reflect the opinions or views of ICS Career GPS or its staff.)