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Why Half of all Startups Fail and the Surprising Secret to Success

Why Half of all Startups Fail and the Surprising Secret to Success

Jill Soley, an executive at Issuu unpacks how we can get more startups to not fail.

You’re an entrepreneur, with a great product. Maybe you’ve solved an important problem in the world. Or you’ve created a super-addictive app. But, for whatever reason, your creation isn’t flying off the shelves.

You’re pretty sure it’s not a product problem. As you dig in, you eventually come to realize you don’t know the best way to take it to market.

You are not alone.

The scary startup failure rate

Each year, 600,000 companies start up in the US. More than three-quarters of those fail. More than half of those failures—250,000 companies—cite lack of market need or poor marketing as the cause.

Like so many others, you’ve worked hard to realize your vision and bring your product to life. But you’ve also discovered that finding customers and then getting them to buy and use the product is harder than you thought.

Take a deep breath, and some useful advice

In co-authoring Beyond Product, I set out to help founders with exactly this challenge.

In the book, I brought in 50 business leaders to advise you on how to grow your business from your basic idea through to your eventual exit and summarized it into a step-by-step framework.

The focus is mostly around marketing, because this is where so many startups fail. Even if you have an amazing product that addresses a critical need, you have to know where it fits in the marketplace, who the buyer is, why they buy, how to reach them, where to reach them, and when to reach them.

Until you know this, you have a high chance of failure.

The keys to startup marketing

We’ve put together a simple way to guide your marketing journey and help you consider what is most important in each phase. These steps apply to entrepreneurs, particularly to tech startup founders.

Step 1: Understand what marketing is.

Confusion about what marketing is drives the majority of the problems founders face with it. Essentially, marketing helps the organization understand who their customer really is and what they want. And it helps the customer understand what the product is and how it can benefit them.

There are several different marketing disciplines. Don’t worry about them all. Start by identifying and understanding who your market is and the best way to reach them.

Step 2: Prove your idea.

At the outset, you need to determine who has the market need and exactly what they need. Don’t skip this step. It sets a startup off on the right (or wrong) path. If you take one piece of advice away from this article it should be this one: talk to potential customers, a LOT of them. Not your friends, not your family. Listen to a lot of people you don’t know to confirm you have a market and understand their needs.

Step 3: Prove the product.

The looming question at this stage: what do we need to do to get to product/market fit? Lean on marketing at this stage to:

  • Define and validate the right target customer.
  • Create and test early messaging and positioning.
  • Start creating your first sales tools and content.

Step 4: Prove the business.

Here’s where the pressure is on to grow, grow, grow! This is where you may revert back to thinking, “I have a great product that solves a problem. Why aren’t we minting money?”

Not so fast. You may be antsy, but you likely need to fine-tune your product to ensure it meets the needs of your customers.

You also need to figure out the most effective ways to reach the customer, which messages and features will catch their attention, when, and where. Take a test-and-learn approach to avoid making the wrong big investments.

Step 5: Grow the business.

This is the time to turn up your marketing investment. This includes:

  • Developing a marketing plan.
  • Building out your marketing team and investing in marketing technology.
  • Managing the customer relationship throughout their entire journey. It may sound jargony, but it is essential to pay attention to all the places and times you interact with a customer, from awareness to loyalty. Every interaction is an opportunity to lose a customer, or build their loyalty.
  • Identifying new directions for growth.

Most importantly, make sure you really know your customers. Reexamine your assumptions. Conduct ongoing research and talk to your customers as you evolve and grow.

For years at Issuu, it appeared we were a solution for publishing digital magazines, because these were the examples our marketing team highlighted. And yes, this was true to an extent. Many magazines have long been successful on Issuu.

At the same time, we always suspected that people published many kinds of content on our platform. It took a conscious research effort to look deeper. We learned that over time the balance of content had shifted. Now, the vast majority of files (more than 75%) uploaded to Issuu fall in the small business content marketing category: menus for local restaurants, real estate market reports, catalogs for makers and artisans, non-profit annual reports, and more. Based on this new understanding, we’ve added capabilities to better support these marketers, such as integrations to Dropbox and Mailchimp to connect to their tech stack and help them promote their content to customers.

Step 6: Exit the business.

Congrats! You’ve built your business. Now what?

At some point, you will have some kind of exit. There are a number of scenarios: you IPO, you get acquired, you fail and shut your doors or you leave the company for your next big adventure. No matter which future you face, the exit is tense and filled with emotion. Regardless of the outcome, be prepared with a strategy.

Communications become key here: to the market, shareholders, stakeholders, employees, partners, and customers. Be sure to have a strategic communications plan and trusted communications person or team.

A final thought

Underestimating or not understanding how to leverage marketing is among the most common reasons for startup failure. Want to avoid being a statistic? Simply taking the time to learn the fundamentals and where to focus at each stage will reduce your risk of failure significantly.

Author

Jill SoleyJill Soley is Vice President of Product Management at Issuu, where she oversees the strategy and development of Issuu’s popular SaaS digital publishing and content marketing solutions. Prior to Issuu, Jill spent nearly 20 years launching and growing innovative software products at startups and large companies, including Adobe’s Creative Cloud and Freshworks. Jill is author of the award-winning startup marketing book, Beyond Product, has BS and MBA degrees from MIT, and began her career in documentary film and educational multimedia, learning how to listen, educate, and connect through stories.

The post Why Half of all Startups Fail and the Surprising Secret to Success appeared first on SmartHustle.com.

Source: Smart Hustle