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Did you know that at least 72% of all new products and startups fail?
While most of us only ever hear about wild entrepreneurial success stories, in reality, launching a new venture is full of challenges and pitfalls. What are so many entrepreneurs doing wrong, and how can they change their approach to become a success story?
One of the most common mistakes startups make is launching a product or service that people don’t need. After working with thousands of entrepreneurs, we’ve seen many startups fall at the first hurdles, simply because their idea didn’t align with market demand.
Alternatively, we’ve also worked with plenty of founders who leverage their existing skills and resources to dive straight into build mode, without setting proper KPIs, clear objectives or discovering their customers’ pain points.
Technical founders are particularly guilty of focusing their early-stage energy into developing working prototypes when in reality, their time would be better spent on identifying the right problem-solution-fit.
On the other side of the spectrum, some commercially-orientated founders invest valuable time and money into creating an extensive business plan. While it’s important to establish a clear roadmap of what you want to achieve and how you plan to get there, drafting a lengthy business plan should not be your first step for launching a new business idea, as it’s often just a list of assumptions that need to be validated on the market.
We’ve helped many clients with early-stage venture building, enabling them to raise tens of millions in seed funding. Whether it’s supporting cutting-edge medical innovations or helping food-tech research teams secure vital funding, we’ve encouraged individuals and organisations across a variety of sectors to embrace systematic entrepreneurship to accelerate their innovation endeavours.
As a result, we’ve developed a proven process to help founders avoid the most common pitfalls by systematically reducing the uncertainty associated with their business idea.
Our five-step process centres around nailing the organisations’ problem-solution-fit, embracing experimentation, collecting evidence, and solving real customer problems with the best possible solutions.
Let’s take a closer look at these five steps:
Any aspiring venture builder should start by compiling a lean canvas to capture their idea and make sense of what they are trying to achieve. We like to think of the lean canvas as a tool to set down their thoughts onto paper and visualise their company’s potential journey.
Compiling your insights decreases the uncertainty as you’re forced to think critically and structure your thoughts in a methodical manner.
The lean canvas is an invaluable resource that will serve as your loyal companion along the entire early-stage development process. You should constantly adjust and amend your lean canvas to encourage iterative improvements in the early stages of launching your venture.
Once you fully understand your business concept, you then need to address any risky assumptions that need to be true for your idea to have any potential. Start by asking whether your target customers have the problems you want to solve, and in turn, whether your idea provides the right solutions for these problems.
As we previously mentioned, most startups fail because founders launch something that people simply don’t need. If there is no problem, there is no business. It’s for this reason that we conduct customer discovery interviews to validate whether customers have the problem you want to solve and identify the specific customers most affected by this problem.
While starting with surveys can be misleading, knowing how to conduct the right customer discovery questions to identify pain points and validate your business idea is vital. As you validate what problems you’re trying to solve, it’s important to recruit the right customers in this discovery phase to make sure you’re solving problems for the right target audience.
Once you’re confident that your business idea addresses real problems, you then want to use insights from your market research to define a compelling value proposition. When crafting a value proposition, you want to create a message that proves you can solve customer problems better than any of your competitors.
At this point, it’s crucial to understand how to identify early adopters who will serve as a launchpad for your business. When you’re dealing with tight budgets, nailing this target market and focusing on the point of least resistance is key to validate your idea and achieve early-stage traction.
After you’ve defined a compelling value proposition and identified early adopter segments, it’s time to put your idea to the test. When taking a startup idea to market, you want to gather evidence (behaviours, not opinions) to help you gauge whether customers will buy and use your solution.
While market testing your idea is an important step in the process, it doesn’t need to cost you the world. Here are some of our top tips for validating a business idea without spending a fortune.
Developing a go-to-market strategy is where the real fun begins as you’ll start to get a real idea of whether your idea has potential. A cyclical process of defining a hypothesis, testing through experimentation, measuring results and translating learnings into iterative improvements will enhance your customer offerings.
In this process, collecting metrics is vital to help you define what a successful venture looks like and identify whether or not your idea is gaining traction. Typical market validation experiments could include metrics like pre-order volumes for an e-commerce platform or the number of monthly active users for a web app Minimum Viable Product (or MVP).
Once you’ve gathered enough evidence to demonstrate that your business idea solves a particular problem and customers want to buy your solution, it’s time to get to work on creating the perfect pitch.
This is the moment to gather all of your insights from your early-stage venture building and create a compelling story to convince investors, competition judges and executives that your idea is going to be the next big thing.
After having worked with hundreds of entrepreneurs, we’ve developed a simple framework for the ultimate pitch presentation. Here are the key elements your pitch deck should cover:
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