The #1 Reason Why 70% of Start-Ups Fail (and What To Do About It)
With COVID-19, corporate downsizing and remote working on the rise, it’s no surprise that Millennials around the world are actively seeking ways how to make money themselves or find ways to raise money for their start-up.
Launching a start-up is never easy.
70% of start-ups fail within the first 5 years.
The #1 reason why most start-ups fail is that their business doesn’t have a product-market fit.
In other words, people are not willing to pay for your service because the problem you thought you are solving, isn’t big enough.
The importance of an existing product-market fit
Product-market fit is a hair-on-fire problem that an identifiable group of people have.
Many start-up founders start with an assumption about their product-market fit, which is fine, but in order to actually test your assumption, you need to take your offering to the ‘real world’, because ultimately only your target customers can decide how well a product meets their needs and whether they are willing to pay for it.
This is why many start-ups create a minimum viable product prototype which allows them to test their idea before building an actual product.
Too many start-ups fail because they waste money on products that no one wants to buy.
To avoid this, start with figuring out your product-market fit.
How to do it?
Apart from the obvious aspects of product-market fit:
1. Determine your target customer
2. Identify underserved customer needs
3. Define your value proposition
…. I’ve put together some of the most overlooked questions aspiring entrepreneurs should ask themselves:
1. Do similar services or products already exist?
Starting a business that doesn’t have any competition is a bad idea.
No competition is a sign that there is no demand.
Competitors are great because they have done the groundwork for you. Your competitors have created a whole industry and demand for what you’re trying to do, so you don’t have to start from scratch.
2. How many people already buy what you are trying to sell?
Here you need to do some market research to understand the potential market share for your business. This will help you to make revenue and growth predictions.
3. Can you adapt your offering to meet the new demands of a home-based customer?
Look for ways to capitalise on changing consumer habits and offer solutions.
The headlines indicate that people are going to be working from home for a long time.
You could diversify an existing product range, develop new products or offer a wider range of buying options to cater to the growing number of home workers.
4. Do you advertise to the right customers on the right channels?
Before you launch your business, you should have a clear idea about how you are going to get in front of your target audience.
You need to know which channels they use, how they buy, how much they spend and what kind of content they consume.
Use streamlined marketing campaigns, social media tools and methods like remarketing to target the right buyers and increase the chances of converting leads.
Think about how you’re going to market and promote your brand and create a strategy. If you’re not au fait with modern marketing techniques, consider teaming up with a digital marketing agency.
You want to shout about your launch from the rooftops, make a splash online and get people talking about your business.
While mass gatherings are not possible, virtual events are an excellent way to get people involved and introduce them to your brand.