Until 2008, there were about 100,000 more new startups than business failures every year, but that ratio has nearly reversed itself in the last seven years. This steep decline in entrepreneurship makes it clear that startups require support -- but in fact that support can also come from within.
While securing backing from the government (or even from large franchisors) may seem good solutions, one of the best ways to help your small business thrive is to go back to the basics. By building a strong foundation, you can make internal problem-solving a cornerstone of your business model.
Take these four simple steps to breathe life into your company:
1. Start with the problem, not your product.
Write down the problem you are trying to solve. For example: “Traveling business people don’t like how long it takes to get through airport security.”
Notice I didn’t say to write down your idea. As an angel investor and tech startup founder, I find people constantly spamming my LinkedIn account, looking to pitch their next “billion-dollar idea.” The hard truth, though, is that "great ideas" are worthless. Big problems that need to be solved, on the other hand, can be worth billions.
So, avoid thinking small -- a mindset many wannabe founders fall into. Successful entrepreneurs aren’t in it just for the money; they want to make the world a better place. That kind of drive leads to growth.
2. Talk to 100 people in your target demographic (without pitching to them).
Set up meetings with potential and existing customers to solve problems for smaller groups of people rather than a whole demographic. Narrow your target by getting solid feedback from the 20 percent of consumers who'll purchase 80 percent of your product. Strategically targeting that particular niche will help you to dominate it.
Focus on one key goal: listening. Your focus shouldn't be on pitching; it should be on keeping a sharp ear out for pain points and asking, “Why?”
3. Look for pain-point patterns, and be intentional about addressing them.
Look for repeated patterns in your customers’ behaviors to identify what you’re doing wrong.
When we launched at SXSW, we saw 1,500 people sign up in just five days, which blew my mind. But, soon, customers were leaving more quickly than we could acquire them. So, we invested heavily in UX, listened to why people were leaving and rebuilt our app -- thereby cutting churn in half.
4. Validate that customers are on board.
According to 42 percent of founders writing post-mortem accounts of their business failures, the top reason startups fail is that their products aren’t actually needed in the marketplace. No matter how well you think you know your customers, it’s important to understand whether they actually want what you’re selling. To ascertain the answer, create a one-page website that defines, in uncomplicated terms, what problem you're solving, and for whom. Include a call to action asking customers to provide their email addresses, to receive “early access.”
Create an ad on Google AdWords to drive traffic to the site. Until you have at least 50 email addresses, from the first 1,000 unique views of your website, I recommend that you keep talking to more customers to determine changes you'll need to make to your product.
Every entrepreneur hopes that his or her idea will be revolutionary, game-changing and subsequently profitable. My company, SocialCentiv, was no exception. We launched it on a so-called “brilliant idea” that ended up costing us $2.5 million.
The result was a product no one wanted. We had to admit we were wrong, and then educate ourselves. Through a lot of trial and error -- and eight rebuilds of our core product -- we eventually managed to interest people in SocialCentiv.
The truth is, “easy” businesses do not exist; and 25 percent of startups fail before reaching their first anniversaries. So, instead of focusing on shortcuts or external support sources, zero in on the difficult yet straightforward task of making something people actually want.
Running a business is hard work, but if you’re willing to invest from the inside out, the payoff can be well worth the grind.
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