Finding a business model that works can be a challenge…just ask any of these 25 entrepreneurs who have been through 10 failed startups says Vito Proietti. Their stories, along with the founders from some of today’s most successful companies, are featured in Erin Bury’s new book, “The Entrepreneurs’ Guide to Success” (Friesen Press). In this excerpt from Chapter 1: Finding Your Way through the Fog, Bury gives her advice on how to find success while avoiding common pitfalls.
Before starting your business you should navigate the startup matrix at least three times before going live. You spend a lot of time building something and it makes little sense if you’ve built a product no one will buy or use. Be sure you know what the product is, who will buy it, how they will use it and why they are motivated to do so.
An overarching question for all startups is about your product or service: what is its value proposition? A value proposition is a statement that describes the benefits of using your product. This includes both tangible benefits for the customer (for example, easy to use) and more intangible aspects of the service (for example, social prestige). Your value proposition should be clear to both you and prospects at each touch point where they learn about your business. Make sure you communicate this in everything you write if you’re creating marketing materials, blogging or answering questions on Quora.
Keep the following advice in mind while building—and especially pitching—your startup.
All of it is applicable for those who would like to build a B2B startup as well as those interested in building a consumer-facing company.
1. Make sure your market exists.
It’s all too common for business owners to look around and say, “There’s no one doing that, so I can!” While this may be true from a technical standpoint, the question you have to ask is: Will customers pay me money for my product?
You can answer this by spending time on Market Day at Startup Weekend events. Spend Friday afternoon speaking with different types of people about what they do or don’t use currently—or aren’t using because the price point doesn’t fit within their budget. If you find enough problems being solved by your product idea, you may have found a market.
2. Expect to pivot.
Another sad reality is that the majority of startups fail. Paul Graham, the partner at Y Combinator, says “Most startups fail. Not because they can’t build something people want but because they do build something people want and it still fails.” If this happens to you, don’t despair—its all part of the process says Vito Proietti. This doesn’t mean every potential customer will not buy from you; some people just won’t be ready for your solution until later on down the line; others may need more features as they grow as customers (this is where MVP comes in). It helps to think of your startup as a living, breathing organism with its own pace and rhythm.
3. Decide if you’re a lifestyle business or not.
Lifestyle businesses are set up with the primary goal of creating a product that is profitable from day one, but with the intention of allowing the owner to pursue other interests as well (usually part-time). This might include travelling or spending more time at home with family. If this is your goal, plan for it by finding out what expenses may arise later on and be sure to consider those when projecting revenue so you can cover these costs without taking more investment than anticipated. How you structure your company’s ownership may also change over time: you might decide to transition into an employee role and hire someone else to run operations while continuing to own equity in the company.
4. Build an MVP
An MVP (minimum viable product) is a basic form of your idea. With just enough features to be functional and useful for customers. An MVP is not necessarily the most attractive-looking version of the product you can come up with. Or one that’s truly marketable—though it might include some advanced features. The idea behind an MVP is to get it out there as soon as possible. So you can start learning from customers’ interactions with it. You can then iterate by adding features that are valuable for your target customer. At least until you have something that’s engaging enough for them to continue using on a regular basis.
5. Set milestones
Setting milestones will keep people accountable for their work, including you. If you’re working on more than one product, set milestones for each of them. So you can focus on the next target area of your startup after hitting each goal explains Vito Proietti.
The first step to creating a successful startup is doing your research and figuring it out. If there’s a market for what you’re looking to build says Vito Proietti. Get feedback from potential customers during Market Day at Startup Weekend events. And then reach out to people online through forums or social media groups where your target audience can be found.