Avoid these start-up mistakes
By Scott Francis
In my consulting work and from speaking to inventor and entrepreneurial groups there are a number of common mistakes that often cause major setbacks, delays, or even failure for many start-up organizations or new product initiatives for existing companies. Avoiding these common business mistakes will dramatically increase your chances of success.
Making a product before you know you have a market
Inventors often become obsessed with an idea and spend untold hours or even years working on the development of products or prototypes only to discover when they finish that no one wants their product or is willing to pay enough to make it profitable. Make sure you do the appropriate research to understand for who, where and when and how your product will have value. Don’t offer a product or service just because no one else is doing it. There is a lot of Friday Night Fish Fry’s in Wisconsin because people like them. Offering roasted striped artichokes may be a different alternative but it won’t guarantee that people will beat a path to your door. Before you spend years and hundreds of thousands of dollars developing software make some screen shot mock ups that you can show to prospective clients see if your idea is valuable to them and if they are willing to pay for your solution.
Pricing a product too cheaply
Just because you can make a product easily or inexpensively doesn’t mean that your customers can. Consider what the real value of your product or service is to your customers and price it accordingly. It is always easier to go down in price than it is to go up. Never lower your price to a point where you begin to make people question the value or quality of your product or service. Customers should feel a little pain when paying for your product or service but do so because they think it is worth it.
Selling to the wrong audience
Lots of time and energy can be wasted making presentations or advertising to the wrong audience. Establish a clear picture of who your best prospects are (not just who you are currently selling to) and concentrate your energy on communicating how you can help solve their problems or make their life easier or more enjoyable. Your time is valuable; spend it carefully where you will get the greatest return on your investment. If you have the right message but are advertising or pitching the wrong audience you will fail. You should know your target markets needs better than they do. Once you match your product or service with those who value it highly and are willing to pay for it concentrate on finding more just like them.
Not spending enough time on presentation or packaging
Just because you understand your product or service inside and out does not mean that your prospective customers will. Think of your offerings in very simple terms. Pretend you were a six-year-old child. How would you describe what you do or offer? Can you describe it in a few easy to understand words or phrases? Make sure all of your communications deliver a benefit in clear easy to understand language. A great idea not sold is simply an idea.
Over promising and under-delivering
Don’t promise things you can’t deliver. The truth will be known soon enough. If you can’t make a delivery date you should not promise it. Don’t advertise or promote your product before it will be available. Advertising and publicity done too early will often be forgotten before the potential customer can buy it and could give potential customers negative feelings towards your product or company.
Don’t claim to offer a benefit that you can’t deliver on just to make a sale. If your product or service does not deliver you may get an initial sale but will not get repeat customers and your reputation will be ruined for future offerings.
Building in features that customers are not willing to pay for
Just because you can add a feature or benefit to a product or service initially doesn’t always mean that you should. Only add those features or benefits that customers are willing to pay for. Trying to deliver the perfect product or service may cause you to be late to market and leave room for competition. While you are waiting for the perfect product someone somewhere will be coming up with other improvements or changes. If you always wait until you can react you will never get to market. Adding additional features or benefits periodically at later times gives you the opportunity to adjust pricing and keeps the competition off guard. Over building your product or service and also add cost that can potentially price you out of the market. Carefully consider carefully what is the minimal product is that your target customer will gain value from and is willing to pay for.
Spending on advertising because it is seen as “cheap”
Business owners sometimes buy an advertisement because it seems cheap compared to other forms of advertising. Just because a certain type of ad is relatively inexpensive does not mean that it will work for you. Consider who your audience is and what sort of interest they have and what publications or media do they use and enjoy. An expensive ad in a targeted media may be much less expensive in cost per sales delivered than a less expensive alternative.
About the author: Scott Francis is the author of the book “Marketing is About Making Money” and president of Topline Development LLC, a business consulting company that helps start-ups and larger growing companies identify and solve major strategic issues. To learn more about Topline Development LLC, contact Scott at Scott@ToplineDevelopment.com