The number of startups launching every month is growing at a fast pace. Some entrepreneurs opt for a service based model, while others like me go the product model way. Although, there is no clear winner in terms of which model is the best, right or a deal breaker, there are many factors that contribute to the success or failure of startups.
However, when I launched my startup Sainergie, an IT products and services provider, I realized that running a product startup is fundamentally different from a service startup. Apart from a few other steps, you need to take care of idea generation, design, prototype, development, testing and iterations, before you actually launch it. A sizeable amount of resources such as capital, time and energy has to be spent, believing that you are really developing an amazing product that will sell itself. Well, if it was only that easy!
There are several factors you need to bear in mind while launching a product startup. I am listing them here based on my experience.
Is there a market?
You have developed a great product. At least you think so. But, is it good enough for anyone to buy? Does there exist even a little or a niche market for your product? According to an article published in Fortune, the ‘lack of market need’ was the top reason due to which most startups fail! It may even happen that you are ahead of the market curve, that is, customers do not require your product at the time which you think is right. Or maybe, the need is there, but there isn’t an appropriate supporting technology.
For instance, Pebble, Apple and Samsung are among a few leading brands in smartwatches today. But, it was Microsoft who launched it about a decade ago, only that it failed because it was as much a matter of bad timing as that of a poor design.
So, don’t jump to the product development stage straightaway. Put efforts in conducting in-depth market research, studies or surveys to see if the time is right to bring your product in the market.
Are you trying to innovate or reinventing the wheel?
The debate regarding which is better – innovation and reinvention of the wheel, isn’t new. Every product entrepreneur delves on this question before going to the drawing board. But, let’s first understand the difference between the both.
Innovation is building a product that brings a paradigm shift in the customer behaviour. It provides a novel solution in addressing the customer’s pain point. For example, FusionCharts, the provider of interactive JavaScript charts, is one of the most innovative technology companies that disrupted the data visualization industry. Reinventing the wheel is about coming up with a new or a creative idea to change or improve a product that already exists. Here, we can take the example of TATA, which designed the cheapest and smallest car Nano to disrupt the car segment and gain 17% market share.
In my opinion, you shouldn’t be afraid of either innovating or reinventing the wheel as long as it could help your product to become a game changer. The only thing you should ensure is to keep your product simple and useful.
Do you have a sales strategy in place?
So, now you have ensured that there is a market for your product and you have a product ready to hit the shelves. Here comes the tough part – selling it. You need to have a well-thought sales strategy in place. This involves:
- Setting deliverables (how much you want to sell in what time frame, market price, profit margins)
- Identifying the sales territories (where you want to sell)
- Creating marketing collateral (mailers, white papers, brochures, blogs, PowerPoint presentations, etc.)
- Finding methods to sell (direct, retail, online, word of mouth)
- Training the sales team (product features, sales pitch, sales targets, customer relationship)
A robust sales strategy will be your road map to positioning your product correctly and gain a competitive advantage.
Do you have the right sales team?
A sales strategy alone wouldn’t suffice. You need talent that can sell your product with the same passion as you i.e a killer sales team that doesn’t let you and your product down.
Ideally, there is no better salesman than the entrepreneur himself. So, think about how you would sell your product if you were the salesman. Or, if you were the customer, what you would want to hear or experience during the sale. Once you learn to sell the product to yourself, you would know the right kind of people to hire. When building a sales team, ensure that:
- You don’t sacrifice quality and fit for a quick on-boarding process.
- Salespersons understand that selling is a pre-cursor to relationship building with customers.
- They want to climb up the ladder, are patient with customers and are open to constructive feedback or criticism from customers.
How flexible is your product?
The customers may love or hate your product. Even if they love it, they may still give inputs on what else could make your product better. If they hate it, perhaps you haven’t done your homework well and need to iterate or redesign your product. Ideally, try to push your first iteration in the market to study what works and what doesn’t. Either way, your product should be flexible enough to change or evolve to meet customers’ expectations. Be open to customer feedback and adjust your product accordingly.
Product startups have their own share of challenges. But, with a right set of mind and determination to do the things the right way, it shouldn’t be difficult to overcome these challenges.
This article was originally published in Inc42.