- January 13, 2016
- Posted by: admin
- Category: Startup
Are you ignoring the signs your startup is in terminal decline?
In The Smith’s classic, Morrissey sings “Girlfriend in a coma, I know, I know – it’s serious”. The inferences are clear. His girlfriend is in a coma and whatever you do, you don’t need to tell him, as he knows it’s serious. Leave him to it – he’s got this. You’ll probably just upset him more by going on about it…..
If there was a startup version it would probably be something like this. “Startup in a coma, we think, is it? It’s probably not serious and if we keep ploughing ahead with the same things here eventually we’ll be millionaires. Don’t tell me it’s serious, as I’ve my hands over my ears and can’t hear you la la la”. Not quite as snappy and probably why it never materialised into a hit song.
The bottom line is most startups are destined for failure.
This can be due to external factors beyond their control like a competitor with a bigger budget. However, most often it’s due to the same mistakes that are made consistently and repeatedly. If it happens Heaven Knows You’re Miserable Now. No matter what you do the startup is Still Ill. And you’re going Nowhere Fast…. Ok enough of The Smith’s puns…
So what can you do to stop your startup ending up in a coma? We’ve put together a list of the questions you need to ask from day one and continually thereafter to maximise the learning you can get from your startup’s journey and minimise the risk of failure.
Have you identified what your startup does?
This means identifying the existing customer problem you are trying to solve, a clear definition and specification of the solution you are bringing. If you are unclear on what you are doing, you will never be able to convince anyone else to part with their money to buy your solution. Practise your elevator pitch, a one line synopsis of your business proposition with friends and family. Ask them to be honest in their feedback. Take the feedback on board and review the original proposition for the better.
Does a market for your startup exist?
Identifying the customer problem is one thing but before proceeding with any development of a solution, ensure the problem actually exists and there is a sufficiently large market to support it. Otherwise you may end up creating a solution for a problem that no-one really has, hence no customers.
Have you identified your target customer avatar for your startup?
Take Q1 and 2 a step further and actually identify your target customer. Don’t say I want to sell to professionals. Do say I want to sell to English-speaking, tech savvy professionals in the digital arts sector, in their late 20s, early 30s, who regularly use a cloud based, pay monthly, app, for example. This is much more specific and enables you to actually visualise your target audience when developing marketing techniques.
Has anyone in your startup actually spoken to your target customer?
Before your product is developed speak to your target customers. Show them visual mockups or a MVP prototype if available and ask the all-important questions – does this help you, if not what would you like to see, and above all else, would you actually pay for this and how much would you pay? If you don’t react to market feedback you are doomed from day one. Repeat this process continually to ensure changing demands are accounted for.
Have you identified your competition?
You may well have at this stage identified that your market likes your idea and is willing to buy. At this stage you must research the competition. What are they selling, how are they selling it, what are they pricing at, what do the reviews and forums say about their products, can you use public data to estimate their sales etc? Then ask yourself how you could compete positively against this. If you have little to no competition you then need to ask if your market is big enough, or if it exists at all.
Have you identified your price?
Firstly have you identified the cost to develop and incrementally produce each new unit? Has this been incorporated into your price? Have you identified a sufficient margin to cover marketing and distribution costs? Will your market accept the price based on feedback and analysis of competition? Also did you try a range of prices and analyse buying patterns to determine the optimum price?
Have you identified how your startup will actually sell?
Have you developed a strategy to bring your product to your target audience? There are many channels to explore and some may be very applicable to your business but some may not. Have you researched these? Critically, have you developed a series of metrics that will enable you to determine if something is working, in which case the tap can be turned up, or not working, in which case the tap can be turned off as soon as possible and focus changed to another channel of sale.
What is the cash burn in my startup and what runway does that leave?
By now you will be clearer on what your product should be, and therefore how much it will cost in time and money to finish an MVP to take to market. You will also have an indicative idea of price and should be able to cost up direct marketing and selling expenses. This will allow you to quantify up the pre-launch costs. How much cash do you need, how much do you have and therefore can you launch on this cash or do you need to raise funds now? Failure is inevitable if you don’t scope out the practicalities of what you can actually do with your cash at hand.
What skills do I need to bring into my startup?
If the market is telling you the product absolutely must be cutting edge design and available on both IoS and Android format, you need to ensure you have the skills to provide this. In addition, do you have sufficient expertise in marketing, selling, finance etc. There is a lead time to getting talent on board, even if using freelancers, so make sure you analyse this and scale into an effective plan.
Nuvem9 is a startup consultancy founded by people who have been on the startup journey themselves. Our experiences allow us to provide a great combination of experience and understanding couple with a practical hands on understanding of what each startup needs. Contact us via the contact form below for more details on how we can assist you on your startup journey.
(image credit: Ryan McGuire – gratisography.com)