New startups fail for many reasons but more often than not, the most common causes for failure are totally avoidable. In this article I am going to give you in depth knowledge of mistakes to avoid and areas to focus upon to help your company succeed.
Firstly a quick note on my own qualifications for providing such advice. I launched my first company at the age of 21, with a very small 20K GBP overdraft. This was a design, manufacturing and distribution company within the electronics sector. It was a hugely challenging and successful business which grew at its peek to have an annual turnover of 2 million GPB and directly employed more than 30 people, with many many others employed indirectly. In 1998 at 28 and after 7 years of extremely hard work and while still at the top of my sector I decided a change (and rest) was in order and transitioned slowly to the online arena. I have since learned nearly every aspect of the online architecture from building linux servers to programming multiple languages and experimenting with many online business models. I now work freelance for private clients while at the same time running a host of successful enterprises.
The importance of finding the right partners
Internet businesses are unlike any other business in history. Now we have open access to a network of potential partners anywhere in the world who are relatively easy to communicate with and locate. Many look for the lowest costs for obvious reasons though the reality is that more often than not 'cheap' services rarely result in satisfaction but instead frustration and failure. It is imperative to find partners who can help you achieve your goals and paying for quality is well worth it if the end product is satisfaction.
Avoiding wasting time and energy on dead ends
Essentially all good ideas solve one core problem, but non essential features normally account for 80% of bloated product specs, delays and costs.
Concentrate on solving the core problem only and release it to market as quickly as possible without wasting time on features which can come later and be fueled from revenues.
Get the Money!
One of the first thing people do when setting up a business is get business cards made. This makes them feel like they are in business but the first thing any online company should do is set up an system for online payment processing since this will be the first most challenging problem many companies will face with banks taking extra precautions and now requiring online companies to be PCI compliant before they are given a merchant account.
Recognize quality when you see it
Lack of experience is like waring rose tinted glasses where everything looks the same color. When starting a new venture there are untold areas which have to be explored and without experience you will be unable to recognize quality when it is staring you in the face. Before you enter a new arena, get a book on the subject or find a mentor with experience in that sector who can open your eyes.
Picking winning business
There is no way to know what will succeed until you have tried. The key is trying and failing elegantly, avoiding the trap many people make of marrying an idea and being unable to divorce it, relegating themselves to years of torture.
Solving real problems
Designers design for designs sake (caveat I am one). People waste 80% of their time working on things that are not real problems. Just like a designer will develop endless features which will never be used because they like the challenge. Develop a more elegant solution to a problem than already exists and avoid unnecessary time traps.
How to exploit a trend
Marketing is king here. Understanding the nature of building a cult following and virally building momentum is an essential ingredient. If there is a wave coming make sure you are visually standing out from the bunch.
The two most important problems
The first most important problem to solve is how will you reach your potential clients. Gaining a client will have a cost, you need to reduce these costs by targeting your laser and increasing your conversion rate. The second most important problem believe it or not is how your clients will pay you. Many online merchants are considered high risk by banks will and struggle to get a competitive rate for transactions. It is not unheard off that transaction fees of 10% are levied on some online traders. Before you embark on your venture solve this problem.
Dangers of relying on third parties for the core of your business model
APIs are all the rage, though remember a change of TOS or a company you rely on for data going out of business could well render your business non viable.
Finding your clients and marketing which works
There are only four ways to finding a client:
1) Natural Search (perfect).
2) advertising, (brutal and costly).
3) Editorial and word of mouth, (attractive).
4) Direct marketing (only works if you know who your clients are in advance).
Building your clients into repeat customers.
There is nothing better than repeat clients. Make every effort to woo your clients and ensure they get value for money so much so that they will come back for more. Once you make a customer, treat them like you would treat a friend.