From MVP to Market Ready. Common Startup Mistakes and How to Avoid Them
A recent report by Sifted indicates that starting a successful business could be an arduous undertaking while keeping it operating past the seed stage is even more challenging.
In fact, on average, 90% of startups fail due to numerous significant obstacles that get in the way. However, despite the dose of reality, you shouldn’t be discouraged as an entrepreneur to embark on your next venture.
This article delves deeper into the nature of establishing a future-proof business, exploring the most prevalent startup challenges and how to overcome them.
So, if you want to learn more about the topic, stick around till the end.
Reasons Why Startups Fail
According to the CBInsights Survey, startups fail for several reasons, including an inability to raise additional financing, a mismatch in the market, being outcompeted, and a poor business model, among others.
Interestingly, 38 percent of firms indicated that the primary cause for bankruptcy was a lack of cash and an inability to raise capital. Looking further into the demographics, women-led enterprises face even more significant challenges, receiving only 2.3 percent of venture capital funding in 2020.
The second and third causes of startup failure were inadequate market demand and competition; however, despite knowing the ‘why,’ many businesses still fail to get off the ground. Indeed, startups can be notoriously complex to operate, but spotting the right opportunities and carefully navigating the obstacles can pave your way to success.
Tricky Early Stages for a Startup
From developing the initial idea to launching the product, running a startup business means a steep learning curve for everybody involved. As an entrepreneur, you must know the critical initial stages that can break or make your business.
Don’t Underestimate the Importance of Market Research
A solid business idea is a basis for an MVP. But, just having a great concept or a product does not automatically mean that it will appeal to the market – you must also diligently research your target customers to know exactly what clicks with them.
Sifted’s data confirms that only 10% of startup founders were confident in their go-to-market strategy before launching the product. Indeed, many entrepreneurs admit that they analysed markets too late, failing to nail the commercial model and customer approval early on, which led to premature business failure.
At the 200 Billion Club, we advise our startups to use a framework for product/market fit that includes marketresearch, which can be as simple as phoning your potential future customers in order to understand first their needs and second whether your product will be useful to them. This technique has the added benefit of building your future customer base. As one of our founders always says “people love to talk about their likes and dislikes but they don’t like to be contacted for for a direct sale, it’s important how you proffer the ask for your research.”
Take Feedback On Board
The product-market fit is somewhat fragile at the beginning; thus, you need to absorb all the feedback on your product. Negative words can hurt and hamper motivation, but taking them onboard will ultimately allow you to perfect the product for your customers and save money in the long run.
Caroline Hughes, CEO of Lifetise has been building her company with feedback since inception: “You need to build your openness and resilience to feedback early. Get the first version of your product out into the market in its ugly, unpolished state and let your audience tell you what works. We have a mantra at Lifetise of “build in public.” You can only improve the product if you have enough people using it (quantitative data) and telling you what they think of it (qualitative data).”
Tap Into Operational Expertise Early On to Enable Growth
As and when your business grows, you want to have the right people on board – and that doesn’t mean junior staff members. We’re talking about senior talents with the right expertise to take your venture to the next level. Often, startups are reluctant to aim high when it comes to early hiring decisions, but with the right-fit candidate, the investment can pay off quickly.
As an entrepreneur, you might want to do it all by yourself, thinking you’ll save the resources. Operating a company alone can get lonely and daunting as soon as you hit an obstacle. Failure to hire additional staff and tap into consultants means you undervalue the potential these individuals can bring to the table. One of our founders, Amber Ghaddar says: “If you have just finished your raise, then a market downturn is a great opportunity to hire talents at a more competitive rate. But keep in mind if you are about to raise in less than 12 months (in a downturn market), you need to adjust your priorities and make sure that the ROI on your expensive hire is worth it”. More on how to navigate your startup through market downturns here.
Running a startup requires precise orchestration of multiple fronts, which is often easier said than done. Ultimately, it boils down to three key elements – the unique business idea, the ability to raise capital to support product development and growth, and the right people within and outside your organisation.
With a robust business idea that generates sufficient demand, you can be sure that your product will gain traction and provide a basis to raise additional financial capital. In addition, surrounding yourself with experts early on will offer new perspectives in the most efficient way to impact your bottom line.
At The 200 Billion Club, we want to level the playing field for female entrepreneurs across various industries to get the financial resources and the help they need to succeed. Our unique 12-week hands-on programmes for high-potential female founders can open up the doors to effective pitching and powerful negotiation to put your business in the best possible position for fundraising success.