This is another “tough love” post. Everyone thinks that they have the next billion-dollar idea. But let me tell you the truth. You don’t!
Ideas are Nothing –
Execution is Everything.
And when I mean everything, it is everything. Your skills, team, and resources, along with the right business and brand strategy, will make or break you. And this is not your run of the mill business plan. To execute effectively, you need a well fleshed out, actionable strategy that has aligned your solution to real pain points with your target demographic that is ready, willing, and able to pay for it. And that takes useful, accurate data based on the marketplace, not your intuition, friends, or family.
Daily, we get approached by potential clients with the next great thing. So to save us all the time and hassle, here are several reasons businesses fail.
1) You created the product & brand first
Just a few weeks ago, we had a call with a brilliant and very nice programmer who has spent hundreds of thousands of dollars developing a software solution that had no market. The application was designed and built to create a marketplace for business owners. However, he had, in fact, created a solution that only solved a pain point for himself, as he is antisocial and didn’t realize that the majority of his target audience, business owners, by design must have social skills in order to succeed.
Another great example is the business owner who picks their company’s name first, before even knowing their business and brand strategy. FAIL!
2) Failing to create a product that has an actual market fit that people will pay for.
Often business owners create a product to solve for their own pain points or think it would be nice to have, however, unless they are lucky – they FAIL.
Do you want to bet the next 3-5 years and all your savings on luck? Because that’s what you are doing. All too often this leads to pushing a product out into a market with zero research – WHY??. When you could have started with a strategy and fleshed out the risks to mitigate in launching your business and find a niche or brand positioning to ensure you have the best chance to succeed. If you like to gamble, go to Vegas. Don’t start a business.
3) Failing to verify market fit and need.
You see a pattern here? I hope so. Another deadly sin is failing to do the research to see if there is a fit and determine if the need is big enough for people to buy your product. You might think you can do it better than your competition, but without research and validation, you won’t know. Business owners often think that people will welcome their new brand with open arms. But it’s smarter to keep in mind the dog bite analogy. While not everyone has been bitten by a dog, everyone knows someone who has been bitten by a dog. So you are not starting at zero with introducing your new brand, but instead at a negative. You have to overcome the inertia of the marketplace and convince people to give your product a chance. Only then can they know whether your product is better or as good as you likely will claim.
4) Failing to plan for pricing, fit, growth, and costs.
You’ll learn I love the saying that “failing to plan is planning to fail.” It breaks my heart the number of times someone comes to us after achieving a modicum of success, but then they hit a wall. They are not making enough money from their sales to grow their team or grow their marketing. When they started, they randomly picked their price point without considering all the relevant variables to ensure they had enough money planned into their product to ensure the business could succeed. Moreover, this simple exercise is often the same one from above to test out and see if it even makes sense to launch it.
5) Listening to someone who has no business expertise telling you it’s a great idea and using that as validation.
Groupthink is more than just dangerous; it’s one of the seven deadly sins of business. And when you run your ideas in front of friends, family, and even existing clients, well, you are getting the exact data you want and not what you need. The very questions, how you ask them, and who you ask them to will shape the answers you get back. And what most people fail to realize is people close to you want to keep your relationship in good standing, and will often answer you in a way that will preserve the relationship. And more often than not their perspective is already biased because of their relationship with you.
6) Being blinded from reality by your heart, ego, or passion.
Don’t get me wrong; passion is key to success. Even though Steve Jobs is often described as an asshole, he got it. As his famous quote says, “It doesn’t make sense to hire smart people and tell them what to do; we hire smart people so they can tell us what to do.”
But don’t lose hope if this is you. We may be able to help you course-correct before your Titanic hits its iceberg. But remember, if you think hiring an expert is expensive, consider the costs of what hitting your iceberg mean to you in terms of dollars and time, and perhaps these costs alone are good enough reason you shouldn’t launch your business.