Did you know that 90% of all tech startups are bound to fail? There are many reasons why such a huge number of businesses fail within the first few years. But it does not mean you should stop planning your own business. After all, 10% of these do succeed.
So let’s look at the big picture here: what factors decide the fate of your startup? Here are four of the most common and important ones, in no particular order.
#1. A Team that Really Works “Together”
When it comes to business, especially a new one, the team that you have plays a very vital role. You might have the most skilled and amazing-in-every-way team ever. But if they’re not gelled well together and can’t seem to think along the lines of a team, your startup isn’t going anywhere anytime soon.
Startups should be seen as a sports team – the team has co-founders that are extremely passionate about what they want to achieve and 100% committed to their vision. Hire advisers who are armed with the relevant information and just as passionate about making your team work together like the cogs and gears running in a well-oiled machine. This can also add lots of credibility to your team and significantly boost chances of success.
Be a good listener, understand the needs of each one of your team members and then arm them with the tools to perform as one giant force. Give frequent feedback and always encourage the fact that each member is doing it for the team, not for themselves.
#2. Creating a Dire Market Need
Customer needs should be your top priority from day one. Unfortunately, many startups tend to take a nosedive when asking themselves questions like “why should we do this now, especially since we’re offering something others already are, so what would make us special?”
Case in point: Netflix became a major success because at the time, video was making the transition to DVD and only then, it became cost-effective enough to ship on a local and international scale. As a result, a dire need for mail-subscription video arose, which Blockbuster failed to capitalize on. We believe this should be a lesson to any startup that feels they can’t create a market demand urgent enough to fuel their success.
When you sit down to plan your first or next business, you need to think if there is an audience for what you wish to offer. Any idea, no matter how amazing it is, would fail if it has no takers. And remember this, marketing cannot always make new buyers. You need to be certain of potential before you flood the market with what you have to offer.
This can be done by having focus groups and seeing their needs. For example, if you are coming up with a vaccine for polio, you would not find much success since the disease has been nearly eradicated. On the other hand, investing in a treatment for AIDS can be beneficial, even though there are thousands of other companies working on finding a treatment for the same disease. Yet, the demand for a cure is still there.
#3. Which Brings Us to “Offering Something Unique”
See what your clients need and provide them just that. You need to know the USP of your business, and contrary to the popular belief startups can compete against big giants as well if they plan properly.
Look at it this way: most of your competitors are likely offering solutions in a generic way because they probably feel they have done “enough” for the time being. The best way to grab those customers and make them yours is to address problems in a unique way and offer solutions that are vastly different and better. You can then patent your solutions!
The alleged “real driving simulator”, Gran Turismo, developed by Japan’s Polyphony Digital exclusively for the Sony Playstation, dominated the console driving game market for nearly a decade. Eventually, a US-based developer Turn 10 working under Microsoft Game Studios, beat PD at their own game by not only offering the same high car count and track roster in the Forza Motorsport franchise, but also by vastly improving game physics and engine sounds.
Strike the iron while it’s still hot and capitalize on your competitors’ shortcomings. It’s a chance to win a whole lotta’ customers who are yours to keep.
#4. Be at The Right Time and The Right Place
You need to choose the right place to start your business. There are several cities in the US that are considered lucky for startups due to the policies there. In some you get amazing benefits and in others you have to pay little taxes. If you choose a very expensive city, your business will find it difficult to find a foothold. While, a different city may require you to move, but if you have the passion and faith in your idea, then shifting base should not be an issue.
In addition to the place, you need to take care of the timing as well. It is critical from a competitive standpoint. Some of the weakest and most underfunded startups have prevailed while working hard to stay afloat in stormy market conditions.
For instance, when YouTube had just been introduced, it had to compete with about a dozen or so video-streaming services. However, YT timed their launch at a critical moment: right after high-speed internet had gone mainstream, which at the time, no other streaming service had embraced. The end result? Insane, radical success with billions of users.
Study the market carefully, study your competitors even more carefully and unleash your potential when the time is right.
In a nutshell, it is all about providing people what they want and how they want it. Start with an idea that can turn into a success, and then reach your target audience to know about the solution that they need. If you play your cards right, it will not be too long before you begin to make a profit.
Let us know, what are some of the most important factors you think help determine the trajectory of new startups.