Will your startup succeed? These 6 metrics can give you a clue and they can help you address potential weaknesses to minimize the risk of failure.
It’s safe to say that startup founders are an optimistic bunch, but the harsh reality is that their optimism is often unfounded. In fact, 8 out of 10 businesses fail. So with the odds against you right from the start, you need an honest assessment as to whether you actually have a good chance of succeeding.
Here are 6 major factors to consider:
1. Customers and Their Unmet Needs
Do you have customers just waiting for the service or product you plan on offering? You have to find out if there are enough of them who will pay for what you offer. At the same time, if you’re planning on just a small business then you want a small niche so that bigger companies won’t swoop in.
2. The Products and Services You Offer
Once you’ve identified the unmet needs of your potential customers, you need to make sure that what you offer actually meet these needs. You have to focus on these core needs, as you may be distracted with product features or marketing approaches that focus on other aspects.
As you design your products and services to meet these needs, you need to check that you don’t create new problems for your customers even as you solve current ones. It should smoothly integrate with current workflows of customers. There shouldn’t be an overly challenging learning curve. It also shouldn’t be too expensive for customers to switch from what they’re currently using.
3. The Proper Timing
Often, there’s a rush to enter a market with an innovative product. That’s because you want your brand associated with a new solution to a current problem. You don’t want to come in second if you’re only just as good as your main competitor.
At the same time, there’s always a risk in being the trailblazer. Your projected market may be an illusion, or perhaps it may take many years for your efforts to bear fruit. What you therefore need is for customers to immediately switch to your brand as quickly as possible.
4. Inefficient Competition
What you don’t want is to compete with companies who are already satisfying the needs of their customers. As they’re already well-entrenched, dislodging them from their market positions will be almost impossible.
So you need to look for signs of market inefficiency, when there’s a new set of needs that established leaders are not meeting. They may think that they shouldn’t mess with what’s working, but you know that for a significant number of customers things aren’t working all that well at all. For these customers, your products can be what they need.
5. Financial Risk
How much money will you need to launch your startup, and can you get the financing? What’s the potential for returns, and when do you see profits? These are 2 questions you need to answer. You need enough money, and you need to get into the black before your financing runs out!
6. Team Members
Don’t forget the human factor. How well you pick your team partners may be just as important as the inherent features of your products and services.
These factors aren’t meant to discourage you. By using these factors to evaluate your startup, you may find out your weaknesses and address them early enough so that your startup can eventually succeed.
Also, check out – Can You Measure Software Developer Productivity?