Alex Turnbull had an excellent post recently about how too many startups are “playing startup”, rather than building a business. He suggests many entrepreneurs like the idea of running a startup but they have no appetite to focus on the things that matter.
It is a situation I frequently encounter when talking to people running startups or thinking about launching a startup. There is a lot of excitement but a lack of knowledge or even naivete about the day-to-day realities. Startups are shiny and sexy so they’re attracting people who should probably keep collecting a bi-weekly paycheck. I don’t intend to be mean or discouraging but startups are full-on activities fraught with risk and the high possibility of failure.
Before deciding a startup is your destiny, here are some key questions to ask yourself:
Is your idea a business or a hobby? Will you create a product people will buy or will it be a nice-to-have that doesn’t attract enough sales to support a viable business? Too many wanna-be entrepreneurs throw themselves into hobbies with no prospects of ever being commercially viable. There’s not enough interest or too much competition for a newcomer to establish a foothold. Sometimes, an entrepreneur needs to be told their idea has no chance of being successful. It’s harsh but the truth is a good thing.
Does the world need your startup? Does your product solve a problem or change someone’s personal or professional life? Many entrepreneurs get excited about a problem that, frankly, isn’t that big of a deal. Nevertheless, they charge ahead, which is a recipe for disaster.
Do you have any domain expertise? Is your idea supported by personal knowledge, experience and connections? Do you know the market inside out and have a network to provide support, guidance and sales opportunities? If you’re heading into a market with nothing more than an idea, you’ll likely struggle because it’s a world that you don’t know. I’m currently working with an entrepreneur developing software for a market that he has worked in for the past 26 years. It’s a competitive landscape but he has the knowledge and connections to position his product and get some early customers.
Have you talked to potential customers about your idea or product? Is there enough demand to justify the launch of a business? It is amazing and shocking to talk to entrepreneurs who adopt a build it and the will come approach. They believe that whatever they build will be successful because it’s such a good idea. A good example of someone who did their homework before deciding the idea had merit was Lurniture’s David Bloom, who talked with dozens of people that he contacted using LinkedIn. This provided him with valuable insight and validation about his idea.
Do you have the energy, financial ability and support system to start a business from scratch? Startups are exciting and fun but they’re a 24/7 proposition. You need to work hard, hustle every day, deal with never-ending challenges and crises, manage people and attract business. A startup is long hours for little or no pay. In other words, it’s a sacrifice. If you’re willing to make the leap, be prepared for what’s on the other side.
Does the market need yet another player? Even if an idea is good, there are already many companies offering the same product. Every market is ultra-competitive, and first-mover advantage quickly disappears. If you’re making the same widget as the next guy or girl, what’s going to make you different? What is it about your product that will resonate will potential customers? It could be better customer service, lower prices or a feature that nobody else offers. To compete, you need to find that secret sauce. April Dunford has good insight on how to effectively position your product .
Launching a startup is a lot of work and a huge, life-changing commitment. There are risks, obstacles and challenges that stop the most energetic and smartest people from succeeding. It is important to know what’s involved before jumping on the bandwagon. You may discover that having an interest in a startup is completely different from running a startup. On the other hand, a startup may be the right thing to do. It’s a matter of asking the right questions.
More: Brian Casel provides an insider’s step-by-step perspective on how he validated a SaaS product.
I’ve worked with dozens of startups and fast-growing companies looking to establish or accelerate their marketing. My services are driven by frameworks and processes to create messaging, strategic plans and content. If you want marketing that makes a difference, let’s talk. If you are looking for hand-picked startup content, subscribe to my weekly newsletter.