42% of startups fail due to “no market need” - fortune.com
This statistic is interesting , to think that 42% of startups kicked off without properly investigating the group that will ensure their longevity.
Makes you wonder if market testing companies are either under-utilized, potentially overpriced or people think that gut feeling is a type of market testing.
When you launch a product or service, always look to test the market you’re about to go into. Even before you get to that point there are a couple of things to do that cost next to nothing!
Understand the competition:
If there are others within the space that you are looking to start in, get out there and see what they’re doing. Think along the lines of; are their prices reasonable? I also have a look at the setup of their outlet or website. The main thing to observe when looking at competitor’s shop or online presence:
Social media statistics: How many people are following, liking and commenting.
Updated shop, website: Do they run a good business cosmetically?
Price: What are they charging as I can get a good idea of profit from this based on hypothetical overheads that you can calculate.
What you should look for is a good margin based on pricing, and the traction that they are getting through social.
In simple terms I need to be offering something above and beyond my competition to stand out in the market, but first and foremost there needs to be a need for my product in the market.
Get as much feedback as possible:
So this is a really important thing that you can do before spending any real money on market testing, but it needs to be done properly. What not to do.... Have you ever watched one of those talent shows on television and the person comes on who is a singer and sounds like a cat being strangled? When asked by the judges they tell them that their friends and family said they were great and should audition.
Well that is a situation you don’t want to be in when spending hard earned cash on your business. The reason that person went on the show was because the people closest to him were too nice with their feedback and didn’t give them a realistic view of their actual ability.
So with that example in mind, put it into a business scenario. When asking your friends and family to give you some feedback you want to be sure its realistic right? After they have sampled what you have, create a survey on survey monkey and put 10-20 questions in there with a comments section.
Then ask as many people as possible to take a look at the product or service and complete the survey anonymously. What you will get is a good understanding of people’s viewpoint in a realistic manner; get your friends to send it to their friends.
"Some of the smallest actions can have the biggest returns"
The key point here is you will get free market feedback before you have to invest dollars, it will be quality feedback because there is no emotion involved. Even if it is your family, it’s anonymous.
Doing these simple steps to understand the market can help you in a big way and save you some unnecessary expense, because you can change or adjust parts of your offering before you launch. Once you do kick off, there is no reason why you can keep doing these simple things so you continue to have an understanding in a changing environment.
So a couple of tips to think about before you go headfirst into the world of startups, its great fun and I recommend to anyone that if you have what it takes, give it a go. Just remember that statistic I started with and plan well with a clear understanding of your market.