Startups have a high rate of failure. As of 2021, as many as half of all startups close within the first five years, with 20 percent of them failing in the first year.
Entrepreneurs usually have well-founded concepts for starting their new businesses, but is that enough to ensure success? As revealed by CBInsights, there are many reasons startups fail. The problems range from pricing/cost issues, to a flawed business model, to poor or mistimed product.
So before you actually launch your business, taking the time to implement the following steps could mean the difference between short-term failure and long-term success.
1. Keep emotion in its place
You may have worked hard on your product and truly believe that it could help people. But if there’s no demand for it, your startup will be doomed to failure before it gets off the ground. So before doing anything else, you need to determine if there’s enough of a market for your product to guarantee a profit. For example, your homemade yogurt may be a favorite of friends and relatives, but can it compete with all the frozen dessert businesses already established in your area?
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As much as you love your product, it’s important to be unemotional about your prospects before investing a lot of time, money, and energy into it. Asking yourself these questions can help you to clinically assess your motives:
Why do you want to start this business?
What are your goals, both personal and for your business?
Who is your ideal customer, what problems do they have, and how will your business help them solve these problems?
What are your competitors doing, and does your product stand out among them?
Do you have everything you need to launch a business?
2. Do research and analysis.
It’s vital that you know what your competitors are doing. Analyze their activity and use what you learn to your advantage.
Find out exactly what your customers want. You can ask them directly, through the use of feedback forms, or you can make use of analytics to get a feel for your customers’ preferences. A plethora of analytic tools for startups exist that can help you learn where you need to make adjustments, including Google Analytics.
Once you gather information about what works and what doesn’t, act on it. Use the data as a guide to making your product more appealing to your ideal customer.
3. Test your product research in the real world
After doing your research, it’s time to ensure that your product will meet the expectations of your customers. It’s a good idea to do this as cost-effectively as possible while in this testing phase. One way to do this is to offer your clients two different versions of your product and analyze which one they seem to prefer.
Never ignore negative customer feedback; it can be invaluable in making adjustments that ensure customers keep coming back for more. According to CBInsights, ignoring “what users want and need” is a critical error, so keep a sharp eye out for telltale signs of client dissatisfaction. Your willingness to be flexible will be worth it in the long run when you are rewarded with loyal customers.
These are just three ways to reduce your risk of failing as a startup. By taking these steps on board, you will be well on your way to becoming a successful entrepreneur.