Since 2009, I have had the great pleasure and honor to work with young entrepreneurs/start-ups. Be it during mentoring sessions in competitions or as an expert in foundations or special programs.
Working with entrepreneurs and their projects in modern technology taught me a lot and showed how technology can improve the world around us.
Despite the passing years and a growing number of materials for start-ups, entrepreneurs still face many common problems.
I invite you to join me for a heavy dose of knowledge, examples, reports, and data.
Solve problems by focusing on a narrow specialization
The greater is the need for a solution to a problem, the more likely people or businesses will be willing to pay for it.
Thinking in a way – problem -> solution, in my opinion, is an ultra-important aspect when running your own business. It defines how we do things and allows our products and services to go even higher.
If you ask most failed business owners what problem they solved, they either couldn’t answer, or the issue they solved wasn’t pressing enough. Note that the affliction you are solving does not have to be very complicated. For example, when baking gluten-free bread, you’re solving a problem for people who are allergic to gluten, or by sewing clothes, you’re helping with uncomfortable walks in windy weather. You need to know what your customers will get out of your business at the end of the day.
Although I work close to technology every day, I would make a bold claim to focus your attention not on the technology but primarily on the solution. During your journey, it may turn out that the problem you want to solve is not as urgent as the one you discovered while working on the solution to the first one. It will make it easier and simpler to make quick decisions and maneuvers. It was the quick turnaround that saved me from collapse many years ago when it turned out that the problem we wanted to solve was not at all what it seemed (more here).
Don’t get me wrong, I’m not talking about sloppiness, but maybe, for example, building a complex and sophisticated payment system for your idea can wait, and you can do the first twenty transactions manually.
Also, remember that you can’t solve problems for a broad audience in one go. It would be best to specialize in something, take your path, and only then expand the range of solutions. Remember to talk to people, listen to them and ask what they need. It may take months or years to get to the point where a narrow area of specialization is no longer enough. You won’t improve the entire education system right away. However, you can try to solve problems such as teaching math for college entrance exams or people learning algebra.
So your first steps should define the direction you want to take, the problem you want to tackle, and how you want to solve it.
Check the market
While you may be very excited about your idea, claiming that it solves your target audience’s most pressing problems, your customers may not need or appreciate it. Many companies fail to assess the needs of their target market correctly. They build products and services that no one uses later, or the target audience was selected in a way that they can’t afford them.
- According to the Startup Genome report, 9 out of 10 startups fail,
- 7.5 out of 10 Venture Capital-backedstart-ups fail (source Shikhar Ghosh),
- and 2 out of 10 startups fail in their first year (source: Bureau of Labor).
Before you act, research your target market thoroughly and don’t rely on your friends’ opinions. All kinds of data and reports will help you here. Try to dive into them as deeply as possible. Analyze dependencies and possible bifurcations. Also, check out government organizations, NGOs, media and listen to the voice of experts.
When we look at the report “The 20 Reasons Startups Fail”, we can see that up to 42% of young companies fail due to a lack of market interest
Therefore, it is best to start contacting your potential customers at the earliest possible stage.
You don’t always have to do it in the real world. The Internet and LinkedIn, for example, can come to your aid. All you need to do is find people who are potentially interested in your product or service and ask them the questions you are looking for answers to (although I would suggest building trust beforehand – even with a personal brand). I would avoid surveys of any kind and leave them at an early stage as open-ended questions allow you to enter the discussion and establish a relationship. Remember to keep your message short. There is nothing worse than content that is several thousand characters long. The text should be long enough to fit on the phone screen without scrolling.
In addition, the Internet has moved a whole bunch of conferences and events that try at all costs to resemble those taking place in the real world. You should be interested in both start-up and industry-specific ones. You can sit at a virtual table, talk to live people, and ask their opinions. You don’t have to limit yourself to just the local ones. Thanks to digitalization, the whole world is open to you. You can find companies, organizations, and accelerators that focus on start-ups e.g. at: https://www.startupblink.com/organizations
It is also a good moment to think about your solution’s business model and pricing. Find out how much people would be willing to pay for your product or service, and remember not to do anything for free. As the research shows, it gives practically no benefit. Remember that the price should not be too low (e.g., with minimal margin – calculate it well) because you won’t have a chance to introduce any discounts or promotions in the future.
Check the competition
Over the last years, I have often encountered situations when an innovative project burned out due to underestimation or even failure to notice the existing competition.
When I start working with young entrepreneurs, I always ask them to see if they can define their competition. The response I usually get is that there is no competition, or it’s even insignificant.
In this case, as homework I ask them to check it again, draw conclusions and In this case, as homework, I ask them to recheck it, draw conclusions, preferably present a report supported by an analysis of market data and immediately prepare information about the target audience. At the next meeting, I usually received the same information: “competition does not exist, and even if it does, they do things completely different, and the market is – big”. I knew then that we had a long way to go, and most often, we were back to the starting point, and when another request to research the competition and the market didn’t work, then I tried to come up with the raw facts myself.
Remember, it is not enough to type phrases into an internet search engine to validate your hypothesis. Searching for evidence, including that of your competitors, is a much more complex process, and you may need to dive deeper into data, reports, or statements
You may need to reach out to the community, go to trade shows, or ask experts in your field. Look even where you might not think you’ll find competition, i.e., in large companies that have started working on similar solutions.
Once you confirm the obvious truth that your competition exists, consider what you can do better, faster or cheaper to make your product or service more desirable to your customers. Find out exactly what your competition offers, how the brand is selling, their pricing, what business model they operate under, and how they treat their customers. Every detail you learn will allow you to compete with them. Learn all the weaknesses to make them your strengths. If you find that your competitors have a much better solution, but customer support is their Achilles’ heel, you can emphasize building relationships with your customers.
Sell as early as possible
In the article “How to sell products (not just digital) using a waiting list?” I wrote that the main goal of a fledgling startup is to get to know your target audience and market. I pointed out that a person who has signed up for a product waiting list fits perfectly into such a group. Thus, I urged people to show their solution to the world as early as possible and start monetizing it as early as possible.
Reida Hoffman – “If you’re not embarrassed by the first version of your product, it means you launched too late.”
Let’s look again at the report “The 20 Reasons Startups Fail”. It shows that:
- 29% of start-ups fail because they run out of money,
- 18% because of cost problems and bad pricing.
Therefore, there is no need to delay the moment of getting your first customers. Every moment is good. Whether you have just an idea, a PoC, an MVP, a working prototype, or you are starting with a new branch of your company. The sooner you start, the sooner you’ll have the data you need to draw conclusions and be sure of your direction.
Also, remember that 88% of people trust online consumer reviews just as much as recommendations from family and friends. Take advantage of this.
Focus on your customers
Remember your customers and focus your attention on them. It would help if you were unhealthily obsessed with their needs, which are one of the biggest sources of conflict in business.
If the customer doesn’t get the service or product they expected, they will feel frustrated. But this is a critical moment that you need to seize.
Show a lot of understanding, be patient and listen to what they are saying to discover the intention behind their words rather than any unpleasant words you may have fallen victim to. This way, you can nevertheless contribute to finding a solution, getting out of conflict, and building a long-term relationship, even if the customer was upset about their first experience with your brand.
At this point, I heartily recommend the book “How to Win Friends and Influence People” by Dale Carnegie, which has not lost its value and message despite its years.
70% of companies say that keeping a customer is much cheaper than acquiring a new one, which is seven times more expensive. Moreover, paying attention to the needs of existing customers is more likely (60%-70%) to result in repeat sales than trying to sell to a new customer (5%-20%).
The easiest way to build relationships with customers is through loyalty programs. In a survey conducted by HubSpot, 79% of consumers said that these programs make them more likely to continue shopping with a brand, and 66% admitted that they modify their spending to maximize the benefits of loyalty.
Gallup’s research also found that a highly engaged customer brings 23% more revenue than the average customer.
Remember, enhancing your customer service and focusing on an excellent loyal customer experience will still cost less than a lot of money spent on advertising to attract new users to your business. New customers are a long process to attract them and then an expensive process to keep them interested while they make their decisions
Meanwhile, your former customer mainly needs reassurance that you consistently deliver on your promises to them. Additionally, the fact that (according to Gartner) customer experience is more important than price for 64% of people, customer experience is more important than price.
Startups that retain 15% of regular users can get a 33% jump in revenue with their continued support. Regular customers become your brand ambassadors and attract new customers to your brand.
Indirectly, even a 5% increase in customer retention can translate into a nearly 75% jump in user base for a company. That is why many start-ups actively promote referral programs to their regular customers to reward them with the indirect benefits of the relationship.
Focus on the people you work with
Running your own business is a difficult task. Therefore, it is very important to make sure and ensure that you surround yourself with the right people. That includes associates, employees, mentors, and strategic partners. The right team can help you achieve better results than if you did it alone. Try to avoid friends and family you start a business with just because you are afraid to go into the unknown yourself and want a companion.
You need to feel that you surround yourself with people you can rely on, who you can fully commit to and entrust with tasks. Few things can sink a company as quickly as low-quality employees who will discourage our customers from the company
You can roll up your sleeves and work alone, but it’s impossible to work endlessly as a lone wolf and live in the belief that this is what you will be admired for. That doesn’t work in the long run.
Trusting your employees increases productivity, enables collaboration, fosters creativity and innovation, and allows for quicker conflict resolution.
Build a work environment that everyone can participate in and influence. By doing so, you will create a positive culture within the organization.
Additionally, you can use the OKR method, a goal-setting framework used by individuals, teams, and organizations to define measurable goals and track their outcomes. Also, take care of the broadly understood well-being, listen to your employees, talk to them and give them more and more space to manage, and you will feel your company grow.
In organizations that are trusted, employees receive autonomy from their leaders. Managers set clear expectations (usually in conjunction with their team(s)) and then allow their employees to carry them out the way that they feel is best.
Some of the most harmful factors that reduce productivity in a company are micromanagement and lack of direction. When your employees don’t know which goals and objectives are most important, they won’t engage well with them. As the Citigroup/LinkedIn survey showed, control at work is a powerful motivator. 64% of respondents would turn down a 10% raise in favor of more flexibility at work.
Additionally:
- A company comprised of productive and innovative teams with high employee engagement rates is 21% more productive,
- according to Hay Group research, highly engaged employees are 87% less likely to leave than disengaged employees,
- 89% of employers believe that employees leave for more money, but only 12% actually do so,
- according to Gallup, happy employees are 12% more productive, and unhappy employees undermine the good work of happy ones,
- when managers don’t hold employees accountable for their performance, about seven in ten employees (69%) don’t engage with their work, and only 3% of them actually do.
Build solidly – company, networking and relationships
The Journal of Business Venturing surveyed 405 entrepreneurs and found that nearly 65% of business owners started their own business (at least in part) because they wanted to accomplish something they would be admired and recognized.
Additionally, many entrepreneurs focus on having an idea, starting a business, getting their first customers, scaling the business quickly, and becoming spectacularly successful. At the beginning of their journey, they often forget that the key to success is to have a plan, think things through, and create a solid foundation. A solid foundation is a mindset and will ensure that our business does not falter when adversity threatens it.
Many start-ups also plan to scale the business quickly to raise an investment round as soon as possible. Then sell their stake and run away from their existing business or move on to another company. There is nothing wrong with this as long as everyone around is aware of the decisions we have made
Some people do very well just in the early stages of a business. They can grow a business to a huge size very quickly, but they are not good at getting stuck in the structures that large companies need to have
However, despite their plans, they don’t forget about the most important issue, which is just building a solid foundation so that the company survives all the ups and downs. In the end, it can cope without them and be taken over by other owners.
Take care of financial issues, legal issues, people, infrastructure, technology, and create a good plan of action (and don’t be afraid to change it and adapt to market realities).
The second important issue is networking. That is, establishing and nurturing long-term, mutually beneficial relationships with people we meet on our way. Regardless of where we are – whether in the real or virtual world, at the gym, pool, morning coffee, or scientific conference. Often, all it takes is for us to take our eyes off our phones in a public place, and we find that opportunities to expand our network of contacts are right at our fingertips.
I wrote about the importance of networking and how to build relationships with other people some time ago in one of my articles (which I encourage you to read).
When it comes to networking, you can listen to experts or look at the start-up scene. It turns out that people who have a lot of contacts are often the most successful. When they invest in professional and personal relationships, they gain substantial mutual benefits. They develop their skills, stay up to date on industry trends, recruit better for their company (according to Forbes, about 80% of jobs are not posted online), meet mentors, partners or customers.
Being part of a network means that tomorrow your friend may become a member of an investment fund and help you raise money to grow your business. Or they may become a member of a joint consortium to grow your business together. The possibilities are endless when the people you have relationships with belief in your intellect and trust you.
Even these virtual relationships are worthwhile. LinkedIn reports that 80% of professionals believe networking is important to career success. 35% say a simple conversation on LinkedIn has led to a new business opportunity.
Conclusion
Remember one thing and probably the most important:
Create products and services that you would like to use by yourself.
