Start-up Strategies: A basic guide so often overlooked
I have seen a lot of business plans and investor pitches and, almost universally, the one constant amongst tech entrepreneurs is their unwavering belief that the market desperately wants what they are pitching.
In many ways, this is the true spirit of the entrepreneur. However, many of these aspiring entrepreneurs don’t have a realistic user acquisition approach to match their ambition. Too few have a tangible go-to-market strategy that can allow their business to grow; the majority instead relies on hope and luck to achieve their ambitions. Unfortunately, this leaves the startup landscape strewn with companies that have great products and no customers, and propagates an early landing in the dreaded ‘valley of death’.
Take for example the mobile app market. In the time it takes you to read this article there are probably a hundred budding, global entrepreneurs trying to build the next killer app. I consider myself an early adopter, but the fact is I really only have about 50 apps on my phone and use 5 to 10 of them in any week; the numbers just don’t add up. The reality is that most great apps run out of money long before they get discovered unless they have a tangible sales, marketing and customer acquisition strategy.
Here are some of the common ‘strategies’ I routinely come across:
1. I will use social media to acquire users: I don’t know about you, but I have been using social media for years now and I have about 9,200 twitter followers, about 1,000 connections on LinkedIn, and 350 friends on Facebook – likely all above average. Nevertheless, about every 3 months someone favorites or re-tweets something I say – a slow process for getting the word out!
2. I will hire a sales team when the product is ready: I am still trying to find the killer sales guy that can lift my ventures to the upper stratosphere. The reality is that hiring (and firing) sales people is one of the most frequent and expensive tasks of the entrepreneur and can only be done once the Unique Sales Proposition (USP) is defined and the product has traction.
3. This product sells itself: No it doesn’t. The probability that you have created the next Facebook or Candy Crush Saga is so infinitely minute, you should assume nothing goes ‘viral’ any more and products don’t sell themselves.
Whatever you are trying to bring to market, the chances of you being successful without a comprehensive strategy is very slim. Here are some tips to help you get started:
• The lean startup: keep your idea simple and stick to your most basic core offering. It’s easy to become over-excited and develop lots of cool functionalities for your product. However, it’s very unlikely anyone will ever know your product anywhere near enough to use advanced functionalities. Instead, let your customers tell you the features they want and are willing to pay for.
• Set metrics: one of the easiest ways to get started is to set metrics and targets which are linked to your revenue model and your growth plan. For example if you are trying to build the next killer app, define what success looks like and set an increasing monthly goal of users.
• Know your addressable market: once you have set that goal, think of who exactly that user is. Is it the 40-something male, early-adopter Entrepreneur-in-Residence, or is it (more likely) the 20-25 year old female Instagram user?
• Test on customers: and factor in how much that is going to cost. There are some great marketing and promotional tools out there to help define your users and reach them at low cost, but you can’t do this until you know who they are.
• Define your USP: what makes your product different and what is the business case for someone to use your product?
Too many entrepreneurs come to market with a product that solves their own problems rather than their customers’. You would be surprised at how many prospective customers are willing to give you real feedback on your solution. Companies are currently desperate for innovation: if the price is right, they make for great early adopters. Friends, family*, universities and startup incubators provide another great low-cost validation point to allow you to talk with potential users and gain feedback on product and sales strategy.
Irrespective of your product and market, don’t launch without first knowing where you are trying to get to and how it is going to be achieved. This sounds like common sense, but the reality is that it often gets lost along the way. If you don’t know how to build a sales and marketing plan, seek help through people that have done this before. Mentor networks, sales and marketing events, conferences and business incubators all provide reliable support to help entrepreneurs get started.