Why Do So Many Startups Still Struggle To Find Success?

There are literally thousands of venture accelerators, pre-accelerators, startup weeks, startup weekends, incubators, platforms, books, podcasts, videos, workbooks, blogs, technology tools and more to help startup founders succeed.

But, how well is the current startup facilitation ecosystem actually working?

Worldwide, of the thousands of startups who apply to seed-accelerators only 2–3% are being accepted; 80% of new businesses never get any monies from third-party investors, and it is commonly assumed that somewhere between 75% and 90% of all startups fail.

You’d think that with so many people and organizations trying to help startups that the startup success rate would be much better than it is.

What’s the Problem?

Over the past 5 or so years, seed-accelerators have shifted from accepting early-stage startups to preferring startups that are much further along and have demonstrated some level of initial sales traction. This has led to a significant reduction in the percentage of startups being accepted into these programs and has left many startups with far fewer choices when it comes to getting the coaching and guidance needed in the very early stages of their development.

And those choices, along with the Lean Startup Methodology itself, gloss over what I feel are several core areas of expertise that are critical to a startup’s success, marketing & product management.

Based on a survey by CB Insights of reasons for startup failure, 42% said there was not enough need for their product, 19% said they got outcompeted and 14% said poor marketing & sales processes was a reason for failure.

I believe that it’s time to incorporate more marketing and product management guidance into early-stage startup programs.

After all, selecting and finding the right customers to target, performing competitive analyses, optimizing product positioning and getting your first few reference-able customers are all critical to a startup’s success and all require marketing and product management skills to execute well.

Without this marketing and product management guidance, far too many early-stage startups are doomed right from the get-go.

Far too many startup founders come up with a what they think is a great idea, they develop the product or service and then they launch it out into the world.

They then hope that people will love their product and buy it.

Unfortunately, building a successful startup isn’t like building a field of dreams.

I’ll never forget one of the first accelerators I mentored at a number of years ago. At the opening reception for the new cohorts, the startups were given the opportunity to introduce themselves, pitch their startup, and ask the attendees, who were mostly mentors and potential investors, for help where they needed it most.

What did most of the startups need help with? They needed help deciding whom to target their product to.

OMG! Each of these startups either already had products developed or had a team of people working on developing their product without even knowing who their customers were going to be.

It’s important to understand that these startups were potentially hard at work:

  1. Creating a product or service that not enough people will want to buy, and
  2. Entering a market where they were not ready to successfully compete.

The bottom line is…

“Without enough customers, it doesn’t matter how good or innovative, or beautiful, or reasonably priced your product is: your business will fail.”

Now more than ever, it’s not enough to build the perfect product. That’s not to say that specs aren’t important — they are. But in an increasingly competitive marketplace where global players can quickly and easily copy each other, differentiation and positioning is the key to a startup’s survival.

To stay standing, you have to stand apart from the crowd in the minds of your customers.

Competitive Differentiation

Effective differentiation is more than simply laying out differences and hoping your customers understand the distinctions. It means creating a customer preference for your solutions; establishing a value edge based on more than just features and pricing.

Proper positioning should be one of the centerpieces of a startup’s strategy. If the positioning isn’t clear, not relevant or misses the mark, people will typically not spend time trying to decipher it.

Buyers have choices (there are always substitutes and alternatives available) and if you can’t explain what your product does, why it is important and how it is different and better than their other alternatives they will move on.

True competitive advantage is all about creating value that really matters to customers in ways that competitors cannot.

So to summarize — to be successful, a startup must be able to:

  • Select the right customers to target,
  • Know how to exploit its competitors’ weaknesses,
  • Optimize its product’s positioning, and
  • Close their first couple of sales to reference-able customers.

That’s what seed-accelerators and investors are looking for.

But many founders continue to mess this stuff up — they continue to push forward with activities that don’t end up getting the results they were looking for.

They keep spinning their wheels without getting anywhere and worse, not realizing that they don’t have a startup game plan that’s working.

So, to help early-stage startups improve their chances for success, LaunchHawk is offering a “Launching a Startup Mastercourse.” This will consist of 3 FREE live webinars commencing on Tuesday, November 6th. at 2:00 pm MST.

In these 3 webinars,

  • How to Create Value That Matters To Customers, That Competitors Cannot
  • How to Gain Initial Sales Traction, and
  • How to Formulate and Sustain a Winning Growth Strategy

I’m going to present…

  • How to find a target market that wants your product and will be easy for you to reach.
  • How to crush the competition by exploiting their weaknesses while offering value that’ll be difficult for them to replicate.
  • How to optimize your product’s positioning so that people will choose it over all their other alternatives, and
  • How to use our PinPoint Visual Framework to develop and sustain a winning growth strategy.

Conclusion

To be a successful startup…

There must be a willingness to learn from customers and use that information to build exactly what they are willing to pay for.

Startup products must be positioned in such a way that it powerfully resonates with potential customers, stands out from the competition, and offers value that compels them to choose the solution over all the other alternatives.

It’s important to always keep in mind that in an increasingly competitive marketplace where global players can quickly and easily copy each other, differentiation and product positioning is the key to a startup’s survival.

To stay standing, you have to stand apart from the crowd.