I’ve found that the very traits that make entrepreneurs capable of starting new businesses (a passion for their product, the endless energy to get it off the ground)are also the things that can limit their sustained success. All entrepreneurs get to that point where we become too close to our concept. We keep planning and planning, and start making assumptions about the usefulness of the product and what the potential user is truly looking for. It’s a classic “forest for the trees” mistake: We’re focused on the details at the detriment of the big picture.
Eric Ries said it best when he wrote that start-ups should release a “minimum viable product” and build the product out from there. Even though this way of thinking has become popular, many entrepreneurs still don’t implement this model because they have spent so much time planning and are unwilling to release the product until it is exactly what they originally conceptualized. The truth is that the product will never be perfect, and you’re not ever going to be completely sure what the users want until you ask and test out your ideas. That’s why I recommend three steps for entrepreneurs to consider so that they can have the confidence in releasing their product early.
The first thing that a founder needs to do is to make sure that the product that they built solves a problem for the consumer. If you spend all this time trying to refine a product when you’re not even sure there is a need for it, then you are wasting both time and money. Even if your product does solve a problem, it may only be for a niche set of users. It is possible, though, to create a solution for that niche set of users and then build it out from there so that it ends up helping a larger base of consumers. Ultimately, you want to make sure that your product isn’t merely made of flashy features that have no staying power for the customer, and that is more helpful than what’s already out on the market.
Even sales-oriented entrepreneurs fall victim to failing to make sure that there is a good market fit for their product, which gets to my second consideration. The sales entrepreneur may build a salesforce to increase sales, but in reality is just creating increased overhead, and using revenue to hide problems with the product itself. When you are using this strategy, you can look at the churn rate to see how many customers are continuing to use the product. After all, it is much more expensive to acquire new clients than it is to maintain your current ones. The sales approach may be able to hide flaws for the short term, but in the long run if the product isn’t fit for the market then it will eventually crumble.
Finally, I’m surprised about how many companies are built without having a true differentiator from the competition. Entrepreneurs need to ask themselves, “What is our strong point against the competition?” Once you determine that, you need to figure if that strong point justifies somebody choosing your company over the competition. If it comes down to a game of marketing and who has the bigger budget, then you are definitely playing a losing game. Your business needs a Purple Cow (see Seth Godin) to survive in today’s market, and if you don’t have a remarkable differentiator, then you will have trouble playing in the long run.
In conclusion, entrepreneurs needs to ensure that their product solves a problem, that it has a good market fit, and that it’s different from anything else in that market. Using this model can define your company’s growth strategy, and help you to make sure that you are building a company with a strong, lasting business model.