There is no rule book when building a startup and no two startups are the same. So whether it’s win or lose, each company is a case-by-case. But what if we could evaluate and see what commonalities lie between failed companies? That’s exactly what Anastasia Mudrova did. After her failed start up, an obsession began to see what could have been the problem and here are the reasons why so you avoid these mistakes.
1. Lack Of Market Potential
Founders are 100% supportive of their product, as it should be. In some cases that passion can blind them from the truth of their company: there’s no market for their product. This point can be completely missed and a main reason why many companies go under.
The market may be too niche, marketing isn’t effective, or maybe the audience simply can not afford it. Many of these obvious reasons can be overlooked when a charismatic founder is at the head and sees the potential of the company. The confidence is great but we must remain doubtful of the product. Make sure to get multiple opinions and verify that there is a market. Ask yourself why, how, and what constantly. You must be your own worst critic or someone else will be. Don’t spend all the funding in production and marketing and whatever else to find out that you’re selling to an empty crowd.
Related: A Warning to Marketplace Startup
2. Focus Groups Are Often Invalid
Beginning a B2C or even a B2B product needs some research. Often times surveys or focus groups are conducted. To get accurate and authentic opinions of whatever you’re aiming to bring to market, you rely on similar tactics with your target audience.
A huge issue that comes back to bite you will be the inaccuracy of the field tests you’ve made in the beginning of your research process. You bring in individuals that fit your ideal customer persona, ask them general questions, and often give them demonstrations. The majority of guests will say they would use your product or agree that there is a need for the product for their lifestyle. So perfect!
You carry on producing and find that even the people who stated that would purchase your product may not have even visited your site or bought the product or service. Unfortunately this behavior is normal. To combat this, make sure you’re getting a large enough sample size and asking more in-depth questions like if they would pay X amount or what could be improved.
3. Not Strategizing Marketing
Let’s touch back on the marketing point we made previously. Marketing is an essential part of the process. You can have the best, fastest, or smallest product but it’s not going to have the proper reach without the proper marketing. This section of the product life cycle can easily be overlooked or underfunded. Make sure you have the proper team to put together an enticing campaign that remains consistent throughout all of your media platforms. Having a proper amount of exposure will make a world of a difference.
Related: 3 Tips to Improve Your Marketing Strategy
4. Pull The Plug
There’s no point in treading dangerous waters. Startups will either prosper or fizzle out within three or four years. Should you rebrand or pull the plug? It’s more detrimental to drag along a dying company when you can stop production and move on to your next project. This will be hard but take all the lessons you would have learned to your next venture.
Hopefully your company is doing great but it never hurts to play the devil’s advocate once in awhile. Verify your market and market well. Good luck!
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