There are two factors where start-ups with great ideas are doomed to fail:
- Too scattergun: An attempt to be all things to everyone. Not connected with customers through engaged dialogue.
- Lack of a unique value proposition: No real differentiation in the market. There is a failure to communicate your idea in a clear, concise and compelling manner.
“The critical success criterion for a start-up business is being able to define the problem you are attempting to solve,” says Andrew Stein, founder of two successful start-ups – PolicyPoint and Payreq. It is important to “keep coming back to your value proposition and testing it with a few customers, before you take it to the broader market,” he says.
Starting and growing a business mean taking time to critically examine the problems that you solve – with a deep focus on what value it delivers to customers. Once you have defined this value, here are a few questions to test out your value proposition:
- Will you really be able to attract the correct new customers? What are the target customer segments? Why do these people buy from you, instead of your competitors?
- Does your strategy fit with prevailing business conditions?
- Does your value proposition make sense? What do your trusted advisers think? Are any of their concerns justified? How can you address their feedback?
Planning: How to do less and get more results
Introducing a new product or service requires planning. You need to think through all the same issues through the lens of your future customers. You need to understand your competitors to avoid threats and seize the opportunities.
The process of creating a plan helps you develop a strategy for introducing your new product or service. A plan also can ensure that success is sustainable. We call this a growth plan, not a business plan.
Where do you start? A structured process enables you to develop a plan in a modular manner.
The growth plan is a combination of formulating a strategy and with specific steps to implement that strategy. The plan makes the connections between the different functions that create value for your clients. It is an iterative process.
What can start-ups do to avoid failure?
We have found that successful start-up business avoid these two common faults by developing more than a business plan. They create a growth plan that focused specifically on revenue growth.
Here are five points we have found distinguish success from failure in start-up businesses.
- Sharpen your value proposition: What makes you different, better than the competition.
- Focus on your target market: Don’t spray and pray. Concentrate and persist.
- Test your plans against your strengths: Successful start-ups not only have solid growth strategies, the growth plan also ensure resources and skills needed to execute the plans are also identified.
- Concentrate your actions in rolling 90-day bursts: Don’t let the important get put off by the urgent.
- Track progress and results: Head off or prevent problems before they become serious.If you’re going into business on your own for the first time, a growth plan can help you side-step issues and focus clearly on what you do best for your customers.
Business owners in a start-up mode are often less likely than bigger companies to take the time to develop a growth plan. But they have as much or more to gain as any wasted efforts are more magnified in small business.
Developing a growth plan should be a rewarding experience – not a daunting task that keeps getting postponed.
Most important of all, a detailed and well-thought-out value proposition and sales strategy in a growth plan gives you the confidence to turn your idea into value for customers – by solving genuine problems for them.
Tell us how this has helped you.