3 Things That Can Sabotage Your Startup
Take a look at the survival statistics of new businesses and you’ll see that more of them fail than succeed. But the statistics don’t tell the whole story.
Startups can fail for a lot of reasons. Sure, sometimes those reasons are external — the market suddenly changes or unforeseen events cause a ripple effect that impacts an industry.
But truthfully? So many startups fail because of human error. The business doesn’t fail so much as the founder makes a perfectly preventable mistake that cripples or kills the company.
This is why working with an experienced startup advisor, or at the very least, running your business plan by other people to have them poke holes in it or look for weak spots, is so important to ensuring your plan is as watertight as it can be before you open your doors.
As an advisor, I’ll tell you that there are a few of those preventable mistakes that fall into the “greatest hits” category — and that don’t always reveal themselves until your doors are open and you find yourself struggling.
Let’s head those off at the pass. Here are 3 avoidable blunders you don’t want to make when you launch your business.
1. You have a great idea… but customers won’t pay for it.
As a founder, of course you’re going to have the best possible impression of your idea. It’s what motivated you to start your business in the first place. And it’s what gets you out of bed in the morning.
However, that’s no guarantee that customers (or enough customers) are willing to pay for what you’re selling, no matter how mind-blowing you think it is. So you need to take off your rose-colored founder “goggles” and take a good, hard look at your idea from as objective a viewpoint as you can muster. You have to look at your idea through your customer’s eyes.
The key question that you need to ask yourself is, “What problem am I solving for paying customers?”
This is the first step of standing in your customers’ shoes and thinking about whether what you’re selling solves a problem that’s painful enough for them to spend their hard-earned money on — especially when there are an infinite number of other ways they can spend their dollars.
And, of course, you need to honestly assess whether your idea qualifies as good or great. You know from your own buying behavior that you don’t rush out to spend money on things just because they are good. Great ideas, great products, great services — they pull you in like a magnetic force.
Another thing to consider from your customer’s viewpoint is any possible resistance to taking advantage of what your product or service offers. If you’re selling something that requires people to change behaviors and habits, or to adopt a learning curve, or to switch providers, you’re going to have to do a better job of selling it, pricing or both. Inertia rules, whether we like it or not.
And speaking of selling, if you can’t explain your product or service effectively, people won’t understand what it is or why they should buy it. They won’t grasp the benefits and see the value the way you do. This is another reason you need to step into your target customers’ shoes and think about how you can speak to them in a way they understand. Nail this up front, and you’ll save yourself a lot of heartache down the road.
2. You have a sales problem.
Too many entrepreneurs fall into the trap of thinking “If I build it, they will come.” They’re so focused on getting their idea out into the marketplace that they don’t account for the level of attention (and effort) they’re going to have to devote to finding and engaging their target audience.
Listen, everything being sold on planet Earth is competing for the money in your customer’s wallet. So you need to come up with a plan that cuts through the noise and persuades your target customers to buy what you’re selling.
If you’re looking for investors, they’re going to want to know what your sales and marketing plan looks like. In detail. And why you think your plan will work. If you don’t have a solid plan worked out, and you don’t know how to explain it, support it and defend it, there’s a good chance you’ll struggle to convince them to fund your business. (P.S. Social media alone is not a sales strategy.)
A strong sales strategy is even more important if you aren’t looking for investors. When it’s just you and your business plan, you’re relatively unaccountable and more likely to just hope your ideas for “how to sell” are going to be good enough.
If you’re truly starting under your own steam, you need to evaluate your sales and marketing strategies through the same lens as you would if investors were holding your feet to the fire. Because In this case, you’re the investor, so it’s your money on the line!
3. You have a competition problem.
Let’s say you have your great idea — and seriously, it is great. Everybody’s socks are rocked, and you’re on track for a wildly profitable year. Gold star.
Now, let’s talk market share — and specifically, how to retain it. Is your idea easy to copy? Is it easy for competitors to jump on the bandwagon? Are you doing the kind of thing that’s easily knocked-off by copycats who can undercut you on price, speed or marketing budget? You may be first to market with an amazing idea, but you’re still at risk for having your customers scooped right out from under you before you can say ‘boo.’
Of course, just about any idea is vulnerable to imitation, and every successful idea will inevitably have other companies trying to duplicate it. Maybe you’re the one copying someone else. Either way, you have to put some thought into how you’re going to differentiate yourself from the other guy(s).
Maybe someone else does the same thing, but you do it better. Maybe that differentiation will be in narrowing your focus to a particular slice of the market. Maybe it will be the features of your offerings, or customer experience, or perks that no one else would offer. Maybe it’s a commitment to innovation and staying on the bleeding edge of your industry. But it’s got to be something.
You don’t have to be the best in the world to be successful — but you do have to be competitive. Your great idea will get you out of the gate — but how you execute it will be the key to building a growing business.
Startups thrive by learning from the mistakes of others.
You want your startup to succeed, and you’re going to do your best to make smart decisions based on solid critical thinking. You’ve probably read more than one book to learn as much as you can on how to “do things right.”
But every startup is going to make their share of mistakes and errors in judgment. From time to time, you’ll do things wrong. It’s only natural.
The trick is to minimize the number of those mistakes, and especially mistakes that can be prevented ahead of time. It helps to study other businesses that struggle and fail, to find out what mistakes they made, so you can learn from them. In fact, that alone could give your startup the biggest competitive advantage it could hope for.
Want more advice like this? Click here.
Tight budget? Check out my DIY Business Plan Kit.