Recently, we’ve been privy to a lot of conversation from small business owners who are trying to come up with new products or services…. some even considering startups.
No surprise. The ongoing disruption small businesses are experiencing (Thanks, Covid) has left owners looking for new income streams to replace those that haven’t come back.
An obvious example is restaurants and bars. But any business catering to a downtown corporate market…. or convention trade…. or travel and hospitality industries…. is also scrambling to replace lost income as many workers continue to work remotely.
Over the years, we’ve seen more than a few startups crash and burn before they even got started. Since offering new products or services is not all that different than starting a new business, we want to share what we’ve learned.
Why do businesses fail?
Usually, there’s a simple reason behind a business failure and it’s generally one or more of these 3 things:
You haven’t identified your target market.
I always cringe when someone tells me “everyone” is their target market. Rarely is that the case.
OK, maybe for something like toilet paper…..or water. Necessities that all humans need. And even then, the target market for pricey high-end bottled water like FIJI is not the same as that of generic brands in the flimsy plastic that you pick up in the grocery store. FIJI customers are willing to lay out far more money than someone who shops by price.
For most ventures, there’s a specific audience. Luxury products are geared to different audiences than mass market offerings. Think Versace vs Walmart or Tesla vs Ford. Whole Foods vs Aldi.
The marketing you develop to sell your products — the language, design and messaging — will change based on who you’re marketing to. That’s why FIJI’s water is “artisan” and comes in a sleek, beautifully designed square bottle. It’s aimed at customers who are willing to pay up for a premium product, not someone looking to save money.
You haven’t verified the need for your product or service.
This reason always makes me sad because I see it far too often and it’s so easy to avoid. You come up with a “great” small business idea — an idea, not a concept because a concept usually involves significant reasoning — and an idea…..not so much.
A doomed-from-the-start startup, on the other hand, usually is the result of someone falling in love with their idea. They’re so sure that everyone will love their product that they neglect to do market research.
The most egregious example I’ve seen was someone who quit a well -paying job (with benefits) to launch a business selling something that not only did not fill a need but few people would buy.
I was astonished.
Had I been able to say something……which I couldn’t because it was a personal relationship and my feedback was not requested….. I would have opened my (rather big) mouth because it pains me to see an eager entrepreneur fail.
But I had to keep quiet while the startup launched, burned and crashed….taking thousands of dollars with it. A pricey lesson that didn’t have to happen.
You haven’t set aside a marketing budget.
We’re website design and developers. We love creating custom sites, and nothing makes us happier than happy clients. But every once in a while, we turn down a project because while the potential client might be able to pay for a custom website, they hadn’t set aside any money for marketing.
Long ago when the internet was in its infancy, you could launch a new business on a website and get away with word-of-mouth marketing or a small public relations campaign to promote your company.
But today there’s no way in hell that can happen. There’s far too much noise….. online and off. We’re bombarded with advertising from a multitude of channels.
That’s why there are influencers on TikTok and Instagram and social media experts to manage your campaigns. Add in email marketing, blogs, podcasts, newsletters, trade shows (yes, they’re coming back!) and other content development and you’re looking at a marketing campaign. And campaigns cost money!
If you stand still and stop promoting, you can be sure your competitors will be waiting in the wings to overtake you. So putting all your money into a website is a really awful idea.
Recently. we turned down a lucrative prospect for reasons 1 and 2. So even though there was a marketing budget, we just couldn’t stomach the idea of participating in a project that was doomed to fail.
Instead, we suggested that they hire us for a few hours of consulting to review their idea and see if we could help create a more feasible option. Because as much as we like making money, we also want to help our clients succeed.
Next time a colleague or friend tells you about an idea for a new product or service and you’re feeling iffy about it, do them a favor. Share this blog post with them. They might be very grateful.
Some interesting post-Covid business opportunities. 13 Post-Pandemic Businesses You Can Start Now
Here’s a book to read for more prep work. So when you come to us to build a new website, you’ve already qualified your business concept. 5 Books to Read Before Starting Your Business by Ken Dunn.
Read this if you’re already in failing mode. 5 Tough Steps to Save Your Failing Business by Doug and Polly White.
And if you’ve had to close up shop. Before you beat yourself up, see what good company you’re in.
One failure does not make you a failure. It makes you a little bit wiser for the next opportunity. Just ask Mark Cuban. 13 Business Leaders Who Failed Before They Succeeded by Lynn Truong.
If you’ve been mulling over starting a new business or launching a new product and having second thoughts, call us. We’re happy to brainstorm with you. Maybe we can save you some money. And grief.